Moody’s downgrades EG

Moody’s Investors Service said it downgraded the corporate family rating of EG Group Ltd. to B3 from B2 and its probability of default rating to B3-PD from B2-PD. Moody’s also downgraded to B3 from B2 and to Caa2 from Caa1 the ratings on EG’s first- and second-lien instrument ratings, respectively of the debt issued by its subsidiaries EG Finco Ltd., EG Global Finance plc, EG America LLC and EG Group Australia Pty Ltd. The outlook on the ratings has been changed to stable from negative.

“The rating action reflects Moody’s view of the company’s limited progress in terms of financial reporting and governance, with regards to internal controls and board composition, relative to its substantially increased scale and complexity following large-scale M&A activity in the last two years,” the agency said in a press release.

The downgrade also reflects the still meaningful gap between pro forma debt metrics and debt metrics based on audited financial figures, albeit reducing and expected to be at the lowest level ever in the third quarter, Moody’s said.

More positively, Moody’s said it sees an improvement in the company’s pro forma debt metrics in 2020, with leverage expected to have reduced to around 6.7x in this year’s third quarter.

The stable outlook considers the new auditor’s opinion won’t be materially different from the unqualified opinion of the previous auditor. The outlook also accounts for EG appointing non-executive directors to the board and that key debt metrics will continue to improve, Moody’s said.

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