S&P cuts Areas

S&P said it downgraded PAX Midco Spain (Areas) and its €1.05 billion term loan B to CCC+ from B-. The 3 recovery rating (50%-70%; rounded estimate: 60%) is unchanged.

“Based on our revised industry forecast, we expect Areas’ earnings to be largely reduced, increasing the chances its capital structure becomes unsustainable,” S&P said in a press release.

The agency forecasts Areas’ S&P Global Ratings-adjusted leverage will be above 40x in fiscal 2020 (ending September) and 12x in fiscal 2021. S&P also sees the company’s free operating cash flow to remain negative in the next two years.

Despite the problems from the pandemic, S&P said it sees the company’s liquidity as adequate though not entirely offsetting the resurgence in Covid-19 cases. Last month, Areas obtained a €165 million government-backed loan, composed of €135 million in France and €30 million in Spain. Also, shareholders injected €78 million of equity. Following these liquidity injections, Areas’ liquidity amounted to almost €490 million, including €34 million of undrawn overdrafts.

The outlook is negative.

Moody’s lowers Equinox

Moody’s Investors Service said it lowered Equinox Holdings, Inc.’s ratings, including its corporate family rating to Caa3 from Caa2 and probability of default rating to Caa3-PD from Caa2-PD. Concurrently, Moody’s downgraded Equinox’s first-lien debt instrument ratings to Caa2 from Caa1 and second-lien debt instrument ratings to Ca from Caa3.

“The downgrade reflects Moody’s view that the probability of a balance sheet restructuring or distressed exchange transactions over the next 12-18 months has increased to a high level. Equinox’s geographic concentration in coastal California cities and New York City has materially delayed its ability to return to a normalized operating level relative to its peers,” Moody’s said in a press release.

The agency noted the level of dues-paying members continues to lag its projections from May. “Given recent performance, Moody’s now expects lease-adjusted debt-to-EBITDA to remain above 12x through FY 2021 based on projected lease-adjusted EBITDA that is close to 30% below the 2019 pre-coronavirus level, and views the company’s capital structure as becoming increasingly unsustainable,” Moody’s said.

The downgrade also reflects Equinox’s weak liquidity. Moody’s said it forecasts Equinox will not have enough cash to meet its obligation as a guarantor of SoulCycle’s credit agreement coming in February.

The outlook remains negative.

S&P cuts National CineMedia

S&P said it downgraded National CineMedia Inc. to CCC+ from B, saying it expects the company to keep burning through cash through the first half of next year.

“We anticipate U.S. cinema attendance will not begin to recover until 2021, which is later than we had previously expected. This is due to the ongoing pandemic, continued delays of film releases by major studios, and the risk that global authorities could impose stricter lockdown measures to limit local resurgences of the virus,” S&P said in a press release.

“Without a substantial improvement in attendance, we expect the company will continue to generate modestly negative EBITDA and cash flow. We expect NCM’s leverage will remain elevated in the double-digits in 2020 and 2021 and will not decline back below 5x until revenue returns to roughly 85%-90% of 2019 levels,” the agency said.

S&P noted National CineMedia has the liquidity to ride out low attendance through all of 2021 but could become constrained by its covenants.

The outlook is negative.

S&P cuts PBF

S&P said it downgraded the issuer credit rating and senior unsecured debt ratings on PBF Holding Co. LLC to B+ from BB. Concurrently, the agency lowered the issue-level ratings on the senior secured debt to BB from BBB-. The 1 recovery rating on the secured debt and 3 recovery rating on the unsecured notes are unchanged.

S&P also trimmed the issuer credit rating and senior unsecured debt ratings on PBF Logistics LP to B+ from BB-. The 3 recovery rating is unchanged.

“Though demand for certain refined products has slowly recovered from earlier this year, we expect margins to remain depressed and no longer assume a mid-cycle price environment in 2021. The rating action reflects a slower path-to-recovery than previously forecast. Though refined product demand has recovered from levels during the national lockdown, margins remain depressed, and we no longer forecast PBF Holdings to generate positive cash flow for the full-year 2020,” S&P said in a press release.

S&P noted the company’s focus on cost-cutting and improving efficiency will enable it to save $100 million and protect liquidity in the near term.

The outlook is negative.

Moody’s downgrades Prisa

Moody’s Investors Service said it downgraded to Caa1 from B3 the corporate family rating of Promotora de Informaciones, SA (Prisa).

“The downgrade reflects the company’s underperformance in 2020 against our forecasts and our expectation of a continuation of a very weak operating performance in 2021, the potential for a distressed exchange resulting from the recently announced amend and extend exercise, and the deterioration in the company’s business risk profile following the planned sale of the Santillana business in Spain,” said Víctor García Capdevila, a Moody’s assistant vice president and lead analyst for Prisa, in a press release.

The outlook remains negative.

S&P lowers Screenvision

S&P said it sliced its rating on Screenvision LLC to CCC+ from B, citing its forecast the company will continue burning through cash because of weak theater attendance through the first half of 2021.

“We anticipate U.S. cinema attendance will not begin to recover until 2021, which is later than we previously expected. This is due to the ongoing pandemic, the continued delays of film releases by major studios, and the risk that global authorities may impose stricter lockdown measures to limit local resurgences of the virus,” S&P said in a press release.

Until an effective treatment or vaccine becomes widely available, which could occur around mid-2021, the agency said it does not see theater attendance recovering and will not recover to 2019 levels (on a per-film basis) until 2022.

“Without a substantial increase in its audience, we expect the company to generate modestly negative EBITDA and cash flow. We expect Screenvision’s leverage to remain elevated in the 6x-7x range through 2021 and remain above 5x until its revenue rebounds above 70% of its 2019 levels,” S&P said.

S&P noted the company has enough liquidity to withstand a low attendance environment through mid-2021, though the springing covenant on its revolver will limit its incremental borrowing.

The outlook is negative.

S&P raises Corsair

S&P said it upgraded its ratings on Corsair Group (Cayman) LP and its first-lien debt to B+ from B. The 3 recovery rating is unchanged.

“The upgrade primarily reflects our expectation that Corsair’s repayment of a portion (about $87 million) of its first-lien term loan will reduce its leverage to below 5x, our previous upside trigger. In addition, the company’s free cash flow generation will also improve as its interest burden is reduced by about $8 million-$10 million,” S&P said in a press release.

Corsair also repaid its second-lien loan.

S&P said it assigned its B+ issuer credit rating to Corsair Gaming, Inc., the issuer of Corsair’s public equity. Corsair Gaming will carry S&P’s public corporate rating, and all outstanding debt has been redomiciled to the new parent.

Moody’s ups Leslie’s Poolmart

Moody’s Investors Service said it upgraded Leslie’s Poolmart, Inc.’s corporate family rating to B1 from B3 and probability of default rating to B1-PD from B3-PD. Concurrently, Moody’s raised Leslie’s Poolmart, Inc. (old) senior secured term loan to B1 from B2. Also, Moody’s assigned a speculative grade liquidity rating of SGL-2.

“The upgrade to B1 reflects governance considerations, particularly Leslie’s recent repayment of $390 million of debt with the proceeds of its initial public equity offering. The upgrade also reflects its improved EBITDA, which when combined with debt repayment has resulted in a sustained improvement in credit metrics,” Moody’s said in a press release.

The outlook remains stable.

S&P upgrades Realogy

S&P said it raised Realogy Group LLC’s rating to B+ from B, its unsecured debt and senior secured second-lien notes to B- from CCC+ and its senior secured first-lien debt to BB from BB-.

After a sharp decline in home sale transaction volume in April and May, the U.S. real estate market recovered faster than expected, pushing Realogy’s revenues up by 20%, excluding Cartus, in the third quarter, the agency said.

S&P said it now sees Realogy’s S&P adjusted debt leverage to be in the 5x area at year-end 2020, an improvement from the agency’s prior forecast for leverage above 6x.

The outlook is stable.

S&P lifts Tupperware

S&P said it raised Tupperware Brands Corp.’s rating to CCC from CCC- and its senior unsecured notes to CCC- from D. The recovery rating remains 5.

The upgrade follows the company’s announcement it entered into a commitment letter on two term loan facilities for $275 million (unrated), consisting of a $200 million term loan A and $75 million term loan B. Proceeds and cash will be used to fund the redemption of the outstanding $380 million senior unsecured notes due June 1, 2021. The notes’ upgrade is based on Tupperware’s intention to repay the remaining balance before maturity, the agency said.

The agency also placed all ratings on CreditWatch with positive implications, indicating it could raise or affirm them following a review.

“If Tupperware completes the proposed refinancing with reasonable terms, maintains adequate liquidity, and continues to improve operating performance, we could raise the ratings to B or B+, S&P said in a press release.

S&P pulls Las Vegas Sands from watch

S&P said it affirmed the BBB- ratings on Las Vegas Sands Corp. and its senior unsecured notes and removed them from CreditWatch with negative implications. The agency placed them on watch on March 20.

“We affirmed our BBB- rating on LVS because it has strong liquidity to withstand the negative effects of the pandemic, and we believe its high-quality gaming assets in the world’s deepest gaming markets will eventually recover. In our updated base-case forecast, the company’s core gaming markets (Macau, Singapore, and Las Vegas) will decline more in 2020 and recover more slowly in 2021 than we previously assumed,” S&P said in a press release.

However, the agency said LVS could reduce leverage below its 4x downgrade threshold by 2022.

S&P assigned a negative outlook reflecting the risk from the ongoing pandemic.

S&P revises Tipico view to negative

S&P said it revised the outlook for Tackle Sarl (Tipico) to negative from stable but affirmed its B ratings on Tipico and its debt.

Germany’s newly agreed regulatory framework for the gaming and sports betting market helps Tipico’s long-term earnings sustainability, but S&P said it estimates it will result in a short-term earnings decline of more than 30% during a period of Covid-19-related macroeconomic uncertainty.

“The negative outlook indicates that we could lower the ratings over the next 12 months if the proposed German gaming regulation or Covid-19 pressures more significantly affect Tipico’s operations, including if leverage increases above 7x, annual free operating cash flow (FOCF) falls below €50 million, or adjusted FOCF to debt falls below 5%,” the agency said in a press release.

Moody’s revises CBL view to stable

Moody’s Investors Service said it revised the outlook for CBL & Associates LP to stable from negative and affirmed its ratings, including the senior unsecured debt at C.

On Monday, CBL and other related companies voluntarily filed for bankruptcy under Chapter 11.

Moody’s said it plans to withdraw its ratings for the company.

Moody’s assigns B1 to TV Bidco

Moody’s Investors Service said it assigned a B1 corporate family rating and a B2-PD probability of default rating to TV Bidco BV, the parent of Central European Media Enterprises Ltd.

Following PPF Group NV’s acquisition of Central European Media, TV Bidco will become the 100% owner and new top company within the restricted group issuing consolidated financial statements for Central European Media’s operating subsidiaries.

Concurrently, Moody’s withdrew Central European Media’s B1 CFR and B1-PD PDR.

Fitch withdraws Greystone loan rating

Fitch Ratings said it withdrew the expected BB- rating on Greystone Select Financial LLC’s proposed $400 million senior secured term loan because the debt issue is no longer expected to proceed in the near term.

Greystone’s BB- long-term issuer default rating is unaffected by this withdrawal, Fitch said.

Moody’s acts on Multiplan

Moody’s Investors Service said it took several actions on debt instruments of MPH Acquisition Holdings LLC’s (Multiplan Corp.) following the company’s change in refinancing plans. All other ratings remain unaffected, including Multiplan’s B2 corporate family rating and B2-PD probability of default rating assigned on Oct. 20. The outlook is unchanged at stable.

Moody’s upgraded to Ba3 from B1 the senior secured first-lien term loan due 2023 that will remain outstanding and assigned a Ba3 rating to the new senior secured first-lien revolving credit facility due 2023.

Separately, Moody’s withdrew the ratings of the previously proposed debt instruments, including the $450 million senior secured first-lien revolving credit facility due 2025 and the $2.47 billion senior secured first-lien term loan due 2027. Moody’s also withdrew the ratings on the $100 million senior secured first-lien revolving credit facility due 2021, and the $1.56 billion of unsecured notes, which have now been refinanced.

Fitch pares Prisa

Fitch Ratings said it downgraded Promotora de Informaciones, SA’s (Prisa) long-term issuer default rating to C from B- on the announcement of its offer to lenders.

“The downgrade reflects Prisa’s intention to enter into an amend-and-extend transaction with its existing lenders that includes the sale of the Spanish business of its education division Santillana to entities related to the Finnish media group Sanoma Oy,” Fitch said in a press release.

If approved, Prisa would make about a €400 million prepayment funded by the sale proceeds of Santillana Spain and of the Portuguese audio-visuals business Media Capital, extend the maturities to 2025 from 2022 of the €750 million residual debt and provide a newly granted €110 million liquidity line.

“Fitch views the transaction as a distressed debt exchange (DDE) under its corporate ratings criteria. Specifically, the proposed transaction leads to a material reduction in terms as lenders will be impacted by an extension of maturities and significant credit deterioration due to exposure to a weakened business profile post-disposal, despite lower leverage following the prepayment,” the agency said.

Fitch said if the deal is approved, it will downgrade Prisa to RD or restricted default before re-rating it.

S&P cuts Exelon Generation

S&P said it lowered Exelon Generation Co. LLC and its senior unsecured debt rating to BBB from BBB+.

Exelon Corp. is conducting a strategic review of its corporate structure that could include a potential separation of Exelon Generation Co. LLC (ExGen) from Exelon. “As a result, we are reassessing our view of the strategic relationship between Exelon and ExGen to moderately strategic from core,” the agency said in a press release.

S&P affirmed its ratings on Exelon Corp., including its BBB+ issuer rating.

The outlook is negative.

Fitch upgrades Natura, Avon

Fitch Ratings said it upgraded Natura Cosmeticos SA’s long-term foreign-currency issuer default rating and local-currency IDR to BB from BB-, as well as its $750 million of unsecured notes due 2023 to BB from BB-. The agency raised the national scale rating to AA+(bra) from AA-(bra). Fitch revised the outlook to stable from negative.

Fitch also raised Avon Products, Inc.’s IDR to BB from B+ and its unsecured notes to BB from B/RR5. In a related move, Fitch upgraded to BB from B+, the IDR of Avon International Operations, Inc. The outlook is stable.

“The upgrade of Natura Cosmeticos and Avon’s ratings reflect the improved credit profile of Natura & Co SA (Natura), the holding company of the two sister companies, as a result of an equity inflow of R$5.6 billion from the recent follow-on transaction. A major part of the follow-on proceeds was used to optimize capital structure and to reduce the group’s exposure to U.S. dollar-denominated debt with the payment of $900 million (around R$5 billion) of Avon’s secured notes due in 2022,” Fitch said in a press release.

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