Moody’s cuts Lycra notes

Moody’s Investors Service said it downgraded the senior secured notes issued by Eagle Intermediate Global Holding BV (the Lycra Co.) to Caa3 from Caa2. The agency also changed the outlook to stable from negative and affirmed the company’s Caa2 corporate family rating and Caa2-PD probability of default rating. The speculative grade liquidity rating remains SGL-4.

“The one-notch downgrade of the $705 million U.S. dollar notes due May 2025 reflects a decline in its expected recovery after the issuance of €300 million notes due April 2025 and the upsized $139 million super senior term loan due February 2025. The Lycra Co. will carve out $75 million worth of IP assets into an unrestricted subsidiary, which will solely guarantee the €300 million notes thus improving its expected recovery against the U.S. dollar notes,” Moody’s said in a press release.

The improved outlook “reflects the improvement in the company's debt maturity and liquidity profile after recently completed refinancing transactions and the expected improvement in earnings in the second half of 2023 from a recent trough. The recently issued €300 million notes due April 2025 and $139 million super-senior credit facility due February 2025 (unrated) extended the company's next debt maturity to 2025 and reduced its cash interest payments in 2023 through pay-in-kind features,” the agency added.

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