Moody's lowers TMF Sapphire view to negative

Moody's Investors Service said it affirmed the B3 corporate family rating and B3-PD probability of default rating to TMF Sapphire Midco BV and changed the outlook to negative from stable.

Moody's also said it affirmed a B2 instrument ratings of the €950 million first-lien term loan and the €150 million revolving credit facility, as well as a Caa2 instrument rating on the €200 million second-lien term loan.

The outlook revision reflects the weaker-than-expected financial metrics as a result of the lower inorganic growth and slowed market growth leading to a high adjusted debt-to-EBITDA ratio of 7.8x in 2018, the agency said.

The negative outlook reflects the uncertainty involved if the company will sufficiently improve the operating performance and credit metrics back toward the requirements for the current rating category over the next quarters, Moody's said.

The company's margins will remain under pressure during the transformation, resulting from the integration costs as well as ongoing competitive pressure in the slower growing market, the agency said.

The ratings are constrained by the very high adjusted debt-to-EBITDA ratio of 7.8x for 2018, along with the limited size and unchanged high reliance on Europe, Moody's said.

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