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S&P alters Pepco outlook to negative
S&P said it revised the outlook on Pepco Group NV to negative from stable and affirmed the BB- long-term issuer credit and issue ratings on the group and its debt.
The agency noted Pepco revised its guidance twice in September. Pepco Group anticipates underlying EBITDA for fiscal 2023 (ended Sept. 30, 2023), of about 750 million, or about 100 million below market expectations from June 2023, when it placed its 375 million bond issue. The group is also pulling back its store opening plans and reported changes to its executive management and organizational structure, including Andy Bond taking the role of executive chairman from the previous CEO.
The negative outlook reflects the risk that headwinds in the group's main growth markets may last longer and have a stronger negative effect on its credit metrics than incorporated in our base case, with a one in three chance of a downgrade over the next 12 months if the group cannot generate positive free operating cash flow after lease payments (FOCF), improve its EBITDAR coverage to 2x, or prevent S&P Global Ratings-adjusted leverage from exceeding 3x, S&P said in a press release.
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