Fitch revises CF view to positive

Fitch Ratings said it revised the outlook on CF Industries Holdings, Inc. and CF Industries Inc. to positive from stable to reflect debt repayment of $750 million this year, product price improvement on the back of nitrogen fertilizer supply rationalization and reduced absolute dividends and distributions following share repurchases and the purchase of the minority interests in Terra Nitrogen Co., LP.

For the last 12 months ended Sept. 30, the funds from operations-adjusted net leverage was 2.8x. Fitch sees it dropping to 2.6x by December 2020.

The agency also affirmed the BB+ ratings for CF Industries Holdings and CF Industries.

Moody’s lowers Acosta

Moody’s Investors Service said it downgraded Acosta, Inc.’s probability of default rating to D-PD from C-PD/LD. The downgrade was prompted by Acosta starting Chapter 11 bankruptcy proceedings on Dec.1. All other ratings, including the Ca corporate family rating, remain unchanged. The outlook remains stable.

Moody’s plans to withdraw its ratings due to Acosta’s bankruptcy.

Moody’s cuts Atlantia, units

Moody’s Investors Service said it downgraded to Ba1 from Baa3 the senior unsecured rating of Atlantia SpA. Atlantia is the holding company for Autostrade per l’Italia SpA and Aeroporti di Roma SpA.

Concurrently, Moody’s downgraded to Baa3 from Baa2 the issuer and senior unsecured ratings for Autostrade per l’Italia. Moody’s also confirmed the Baa2 senior unsecured and underlying senior secured ratings of Aeroporti di Roma. The outlook on all ratings is negative. This rating action concludes the review initiated on 4 July 2019.

The downgrade of Atlantia’s and Autostrade’s ratings reflects Moody’s view that downside risks are growing. The action follows last week’s temporary closure of bridges managed by ASPI over safety concerns and reflects that increased scrutiny of ASPI’s motorway assets could result in potentially significant added costs. Shortfalls in ASPI’s control functions would, if proven, undermine the operator’s credibility and weaken its position in discussions with the grantor over the future of its concession, and any potential renegotiation of the ASPI concession would likely result in less favorable terms, the agency said.

“The confirmation of ADR’s rating reflects Moody’s view that there is some delinkage from the wider group’s credit quality deriving from its debt structure and terms, as well as protections included in ADR’s concession contract,” Moody’s said in a press release.

S&P shifts Salini Impregilo view to positive

S&P said it changed the outlook on Salini Impregilo SpA to positive from negative after the company completed a €600 million capital increase to acquire a stake in Astaldi.

“Of the €600 million, €225 million will fund Salini Impregilo’s acquisition of a 65% stake in Astaldi SpA, the second largest engineering and construction group in Italy. The company also announced the acquisition of Cossi Costruzioni and an offer for some assets of Condotte. Although we anticipate further acquisitions as part of Progetto Italia, we do not expect any to be as large as Astaldi, given limited players of that size in the Italian market,” said S&P in a press release.

The remainder of the capital increase is expected to go toward strengthening the balance sheet by reducing financial debt. “We also understand that financial debt inherited from Astaldi will be limited. We now forecast our FFO-to-debt ratio will exceed 20% in 2019-2020, versus our previous expectation of 15% before the capital increase,” said S&P.

S&P affirmed the BB- ratings on the company and its two bonds.

Moody’s reviews Ocado, notes

Moody’s Investors Service said it placed under review for possible downgrade the Ba3 long-term corporate family rating and Ba3-PD probability of default rating of Ocado Group plc. Concurrently the rating agency put under review for possible upgrade the Ba3 rating of Ocado’s £250 million backed senior secured notes due 2024. The outlook has changed to rating under review from stable.

The review follows Ocado’s announcement that it intends to sell about £600 million of senior unsecured convertible bonds due 2025.

“The proposed issuance will result in Ocado’s gross Moody’s-adjusted debt more than doubling to approximately £1.1 billion. The rating agency recognizes that the company’s already good liquidity will be enhanced by the issuance. In turn, this will provide further support for Ocado’s significant capital spending commitments, which have increased recently, notably with respect to the new Solutions contract agreed with Japanese grocer Aeon and the latest customer fulfillment centers planned for Ocado Retail. However, the increased funding commitments will mean that Ocado’s credit metrics, which were already stretched for the Ba3 rating category, will deteriorate further during 2020,” Moody’s said in a press release.

Moody’s rates Encompass Health debt Baa3

Moody’s Investors Service said it assigned Baa3 ratings to Encompass Health Corp.’s new senior secured revolver and term loan. There is no change to any of Encompass’ existing ratings, including the Ba3 corporate family rating, Ba3-PD probability of default rating, Baa3 senior secured ratings and the B1 ratings on the existing unsecured notes.

The refinancing transaction will enable Encompass to extend its maturity profile. Further, it will expand the company’s revolver capacity by $300 million. The revolver size will increase to $1 billion from $700 million, Moody’s said.

The outlook is stable.

Moody’s gives B1 rating to Kapla notes

Moody’s Investors Service said it assigned a B1 rating to the new €320 million fixed-rate notes due 2026 and €500 million floating-rate notes due 2026 to be raised by Kapla Holding SAS.

Proceeds will be used to repay the existing €820 million term loan B. The company will also enter into a new revolver that will be super senior to the senior secured notes, in contrast with the existing one which is pari passu with the term loan B. Moody’s said it will withdraw the instrument ratings on the term loan B upon repayment and the existing revolving credit facility upon its cancellation.

Moody’s also affirmed the B1 corporate family rating and B1-PD probability of default rating for Kapla Holding.

“Today’s rating action reflects the leverage neutral loan-to-bond refinancing with no impact on credit metrics. Pro forma for the transaction, Moody’s expects the company to benefit from a lower interest cost that will marginally improve free cash flow generation and an extended maturity profile,” said the agency in a press release.

The outlook remains stable.

Moody’s checks Cleveland-Cliffs for cut

Moody’s Investors Service said it placed all ratings of Cleveland-Cliffs Inc. on review for downgrade, including the B1 corporate family rating and the B1-PD probability of default rating. The speculative grade liquidity rating is maintained at SGL-1.

The review follows the news the company will acquire AK Steel Holding Corp. in an all-stock transaction valued at about $1.1 billion on a fully diluted basis. The transaction remains subject to approval from shareholders of both companies, regulatory reviews and other customary conditions and is expected to close in the first half of 2020.

“To the extent that the final terms of the acquisition remain debt neutral for the combined companies and market conditions don’t significantly deteriorate from current levels, Cliffs’ CFR and PDR are likely to be confirmed,” said Carol Cowan, senior vice president and lead analyst for Cleveland-Cliffs, in a press release.

Cleveland-Cliff’s instrument ratings will be dependent upon the treatment of AK Steel debt and any refinancing of AK Steel’s debt in the overall capital structure.

S&P slices McDermott

S&P said it downgraded McDermott International Inc. to SD from CC and lowered the rating on its notes to D from C following the company’s entry into a forbearance agreement.

“The downgrade follows McDermott’s missed Nov. 1, 2019, interest payment on its senior unsecured notes due in 2024. The interest remains unpaid, and the 30-day grace period has elapsed. In our view, this constitutes a breach of the imputed promise of the notes. On Dec. 1, 2019, McDermott entered into a forbearance agreement with approximately 35% of the senior unsecured noteholders until Jan. 15, 2020,” said S&P in a press release.

The CCC rating on the superpriority term loan due in 2021 and the CC rating on the senior secured credit facility are unchanged.

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