S&P downgrades HSE Finance

S&P said it downgraded its ratings for HSE Finance Sarl and its senior secured notes to B- from B, citing weaker profit and credit metrics.

“Notwithstanding the anticipated overall margin improvement in 2023 versus 2022, we forecast HSE Finance's credit metrics will remain weaker for longer than we had previously expected, with S&P Global Ratings-adjusted leverage above 6x in 2023 after a peak of 9.4x in 2022, higher than our September 2022 anticipation of 6.6x.

“Adding to this, cash flows generated in Russia should contribute only marginally to the group's debt-servicing, in a context where German, Austrian, and Swiss (DACH) operations are still expected to face a difficult market environment in 2023,” S&P said in a press release.

The agency said it expects HSE Finance’s EBITDA margin will stay around 14%-15% in 2023, below its historical levels of 17%-19%.

The outlook is stable.

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