Moody's downgrades HSE

Moody's Investors Service said it downgraded HSE Finance Sarl’s senior secured notes due 2026 to B3 from B2, its corporate family rating to B3 from B2 and its probability of default rating to B3-PD from B2-PD. The agency also changed the outlook to negative from stable.

“The rating action reflects HSE's weak operating performance since the beginning of 2022 on the back of weak consumer demand, especially in DACH region (which is the company's main market with 86% of group net sales), excess inventory orders, high inflation, exceptionally high freight costs, Covid-19 outbreak in warehouse and persistent global supply chain challenges which have led to significant decline in earnings,” Moody’s said in a press release.

“The negative outlook reflects (i) the risk that the underlying trajectory of the business could be going back to pre-Covid levels with declining or low level of earnings growth and, (ii) the risk involved in stabilizing operations and improving its cost structure in a difficult economic environment pressured by weaknesses in consumer demand and elevated inflation,” the agency said.

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