S&P rates Argan, bond BBB-

S&P said it preliminarily rated Argan SA and its planned €400 million senior unsecured bond BBB-.

“We believe that the European logistics property market will continue to benefit in the near term from supportive dynamics. These include increasing e-commerce penetration, with online sales expected to rise by 7.8% per year on average across Europe, changing consumer habits toward quicker delivery of goods, and the ongoing reconfiguration of global supply chains, put at the forefront during the pandemic and recent quarters,” S&P said in a press release.

Argan will use about €175 million for refinancing secured debt with the remaining of the proceeds kept as cash to prefund the 2022 and 2023 maturing unsecured bond.

The outlook is stable. “We expect Argan to maintain an adjusted debt-to-debt-plus-equity ratio around 45%-47%, debt to EBITDA around 11x-12x, and EBITDA interest coverage of 4x-4.2x in the next 24 months,” S&P said.

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