Moody's changes TK view to negative

Moody's Investors Service said it changed the outlook for TK Elevator Holdco GmbH to negative from stable and affirmed its B2 ratings. The agency also affirmed the B1 senior secured instrument ratings of TK Elevator Midco GmbH and TK Elevator U.S. Newco, Inc. and the Caa1 ratings on the senior unsecured notes due 2028 issued by TKE.

"Our change in the outlook to negative from stable was prompted by TKE's persistent weak credit metrics since we assigned our ratings in 2020, in particular concerning its high leverage, which the group could not reduce as expected in a challenging market environment during fiscal year ended September 2022 (fiscal 2022)," said Goetz Grossmann, a Moody's vice president and lead analyst for TKE, in a press release.

"We also believe that TKE's profitability will only slightly recover in fiscal 2023 when cost inflation will likely persist, while upscaled restructuring and rising interest costs will weigh on its cash flow generation next year,” Grossmann said.

"The rating still positively reflects a strong order book and the recurring nature of a significant proportion of the elevator services business," Grossmann added.

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