Fitch rates FIVE B+, notes BB

Fitch Ratings said it published FIVE Holdings (BVI) Ltd.'s expected long-term issuer default rating of B+ with a stable outlook and an expected senior secured rating of BB with an RR2 (90%) recovery rating to FIVE's planned Eurobond.

“The rating is based on our expectation of strong deleveraging over 2024-2025 as the Luxe hotel becomes operational in 2024 and reaches targeted revenue and profitability in 2025. The rating also reflects FIVE's small market position in the global lodging sector, limited geographic and brand diversification and execution risks related to its potential international expansion as well as to the completion and reaching targeted occupancy of the Luxe property that is currently at the final construction stage,” Fitch said in a statement.

FIVE will use the notes to help fund its purchase of Pacha this year. Pacha owns a nightclub and three hotels.

The agency said it estimates FIVE’s proceeds from residence sales and sale-and-lease back of hotel rooms will generate enough liquidity to fund the remaining construction costs and repay the revolver that is planned to be established to help fund the acquisition of Pacha.

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