Obbligazioni societarie HIGH YIELD e oltre, verso frontiere inesplorate - Vol. 1
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- Stato
qquebec
Super Moderator
Downgrade di Moody's su CEDC
Approximately USD920 billion worth of rated debt affected
Milan, May 18, 2011 -- Moody's Investors Service has today downgraded to B2 from B1 the corporate family rating (CFR) and probability of default rating (PDR) of Central European Distribution Corporation (CEDC). The rating on the company's senior secured notes due in 2016 issued by CEDC Finance Corporation International are unchanged at B1. The outlook on the ratings is stable.
RATINGS RATIONALE
"Today's rating action concludes the review for possible downgrade initiated on 4 march 2011 following the significant deterioration in CEDC's operating performances during the fourth quarter of 2010 and reflects Moody's expectations that the company's profitability will remain below previous expectations over the short to medium term," says Paolo Leschiutta, a Moody's Vice President-Senior Analyst and lead analyst for CEDC.
Challenging market conditions both in Poland and Russia experienced over the past 12-18 months negatively impacted CEDC's profitability. Operating profit, excluding impairments, for the financial year ending (FYE) December 2010, amounted to US$108.3 million, representing a 34% fall from the US$164.1 million reported a year earlier. At FYE December 2010 the company's financial leverage, as adjusted by Moody's and calculated on gross debt basis, exceeded 10x. "Moody's understands that the significant decline in CEDC's profitability was a result of a number of exceptional items, such as production disruption in Russia during the peak season and soft demand in Poland," continues Mr. Leschiutta. "However, the decline was also a result of more structural issues, such as erosion of the company's market share and CEDC's decision to invest more in supporting its brands, which could result, in the rating agency's view, in ongoing pressure on profitability."
Although Q1 2011 results released on 5 May 2011 revealed a degree of recovery in volumes and market share in the Polish market, revenues in the country were still below previous year, while the Russian operations are still suffering from market disruption resulting in organic revenues declining by approximately 19% during the quarter. Going forward we would expect volatility in consumer spending to continue in both Poland and Russia. In addition, higher spirit prices and the company's intention to invest more in promoting its brands and on the value segment of the vodka market is likely to result in lower profitability than previously anticipated.
Nevertheless, we would still expect a reduction in financial leverage from the level reported at FYE December 2010. However, in the rating agency's view, the company's expected financial indebtedness, coupled with its changing operating profile and volatile market conditions, are more in line with a B2 rating. Further negative pressure on the ratings could arise if the company's financial leverage were to remain sustainably above 6.5x (pro-forma for the Whitehall acquisition) or in case of a prolonged deterioration in the company's operating performance or liquidity profile. Although an upgrade is unlikely at the moment, positive rating pressure could result from ongoing improvements in profitability and cash flow generation, resulting in positive free cash flow generation and in a reduction of financial leverage towards 4.5x.
In April 2011, the Company repaid part of its bank facility amending some of the terms. As a result of this renegotiation the company does not have any longer financial covenants to comply with although the bank facility was reduced to an overdraft facility of PLN120 million (US$44 million) which is currently not utilized and is available till January 2012. Given the short term nature of this line and the uncommitted nature we do not consider this facility as a reliable sources of liquidity. However, we note that the company had US$168 million of cash on balance sheet as at the end of March 2011 (part of which though was used to repay the term loan) and that CEDC recently signed a factoring agreement to sell up to PLN 290 million (US$103 million) of receivables, representing a source of financing for the company's working capital needs. Moody's would expects the cash on balance sheet, the recently signed factoring agreement and the expected cash generation from operating activity to cover for CEDC's significant working capital seasonality during the year, while there are no significant short term debt maturities.
The stable outlook anticipates a degree of recovery in market conditions, which will however remain volatile, and a meaningful recovery in the company's financial leverage from FYE December 2010 level.
The B1 rating on the senior secured notes, one notch above the CFR, and the loss-given-default (LGD) assessment on the notes of LGD3, 38%, reflect the repayment of the bank facility and the fact that the notes rank ahead of the convertible notes which do not benefit from guarantees from operating companies. The notes are secured on: (i) issuer shares and certain company subsidiaries; (ii) a first-priority assignment of rights under particular bank accounts; (iii) a first-priority mortgage over some real estate and fixtures; and (iv) security in certain intellectual properties. The debt rating reflects the relatively low value that Moody's assigns to the pledge on shares in the event of distress.
Approximately USD920 billion worth of rated debt affected
Milan, May 18, 2011 -- Moody's Investors Service has today downgraded to B2 from B1 the corporate family rating (CFR) and probability of default rating (PDR) of Central European Distribution Corporation (CEDC). The rating on the company's senior secured notes due in 2016 issued by CEDC Finance Corporation International are unchanged at B1. The outlook on the ratings is stable.
RATINGS RATIONALE
"Today's rating action concludes the review for possible downgrade initiated on 4 march 2011 following the significant deterioration in CEDC's operating performances during the fourth quarter of 2010 and reflects Moody's expectations that the company's profitability will remain below previous expectations over the short to medium term," says Paolo Leschiutta, a Moody's Vice President-Senior Analyst and lead analyst for CEDC.
Challenging market conditions both in Poland and Russia experienced over the past 12-18 months negatively impacted CEDC's profitability. Operating profit, excluding impairments, for the financial year ending (FYE) December 2010, amounted to US$108.3 million, representing a 34% fall from the US$164.1 million reported a year earlier. At FYE December 2010 the company's financial leverage, as adjusted by Moody's and calculated on gross debt basis, exceeded 10x. "Moody's understands that the significant decline in CEDC's profitability was a result of a number of exceptional items, such as production disruption in Russia during the peak season and soft demand in Poland," continues Mr. Leschiutta. "However, the decline was also a result of more structural issues, such as erosion of the company's market share and CEDC's decision to invest more in supporting its brands, which could result, in the rating agency's view, in ongoing pressure on profitability."
Although Q1 2011 results released on 5 May 2011 revealed a degree of recovery in volumes and market share in the Polish market, revenues in the country were still below previous year, while the Russian operations are still suffering from market disruption resulting in organic revenues declining by approximately 19% during the quarter. Going forward we would expect volatility in consumer spending to continue in both Poland and Russia. In addition, higher spirit prices and the company's intention to invest more in promoting its brands and on the value segment of the vodka market is likely to result in lower profitability than previously anticipated.
Nevertheless, we would still expect a reduction in financial leverage from the level reported at FYE December 2010. However, in the rating agency's view, the company's expected financial indebtedness, coupled with its changing operating profile and volatile market conditions, are more in line with a B2 rating. Further negative pressure on the ratings could arise if the company's financial leverage were to remain sustainably above 6.5x (pro-forma for the Whitehall acquisition) or in case of a prolonged deterioration in the company's operating performance or liquidity profile. Although an upgrade is unlikely at the moment, positive rating pressure could result from ongoing improvements in profitability and cash flow generation, resulting in positive free cash flow generation and in a reduction of financial leverage towards 4.5x.
In April 2011, the Company repaid part of its bank facility amending some of the terms. As a result of this renegotiation the company does not have any longer financial covenants to comply with although the bank facility was reduced to an overdraft facility of PLN120 million (US$44 million) which is currently not utilized and is available till January 2012. Given the short term nature of this line and the uncommitted nature we do not consider this facility as a reliable sources of liquidity. However, we note that the company had US$168 million of cash on balance sheet as at the end of March 2011 (part of which though was used to repay the term loan) and that CEDC recently signed a factoring agreement to sell up to PLN 290 million (US$103 million) of receivables, representing a source of financing for the company's working capital needs. Moody's would expects the cash on balance sheet, the recently signed factoring agreement and the expected cash generation from operating activity to cover for CEDC's significant working capital seasonality during the year, while there are no significant short term debt maturities.
The stable outlook anticipates a degree of recovery in market conditions, which will however remain volatile, and a meaningful recovery in the company's financial leverage from FYE December 2010 level.
The B1 rating on the senior secured notes, one notch above the CFR, and the loss-given-default (LGD) assessment on the notes of LGD3, 38%, reflect the repayment of the bank facility and the fact that the notes rank ahead of the convertible notes which do not benefit from guarantees from operating companies. The notes are secured on: (i) issuer shares and certain company subsidiaries; (ii) a first-priority assignment of rights under particular bank accounts; (iii) a first-priority mortgage over some real estate and fixtures; and (iv) security in certain intellectual properties. The debt rating reflects the relatively low value that Moody's assigns to the pledge on shares in the event of distress.
iguanito
Forumer storico
xs0188109994
fabriziof
Forumer storico
Moody's: may review Tepco ratings if comp laws not passed
rischio di haircut!da seguire e felicitarci di non averlo preso
rischio di haircut!da seguire e felicitarci di non averlo preso
iguanito
Forumer storico
Certamente per ora è meglio starne alla larga; sono convinto però che non la faranno fallire. Vedremo tra un anno
Moody’s downgrades CEDC
Moody’s just downgraded its rating of CEDC
from B1 to B2. The outlook has been put at
stable. The downgrade was a reality after
Moody’s since 4 March had CEDC on its watch
list for a downgrade. The downgrade follows the
weak Q4 2010 results and Moody’s
expectations of continued pressure on the
credit metrics at the short to medium term. The
stable outlook confirms Moody’s expectation of
a gradual improvement of the market
conditions in Russia and Poland in 2011. The
downgrade was anticipated by the market and
the bonds are unchanged following the
downgrade.
We expect significant improvement of the
market conditions in H2 2011, with resultant
increasing operating earnings. In the long term,
we are still very bullish about CEDC and regard
the company as strongly positioned to utilise
the ongoing consolidation in the Russian
market. On the other hand, we assess that the
present short-term momentum is against CEDC
and that the market demands a higher risk
premium until the market is convinced that
CEDC can attain the company’s guidance for
2011. We still assess that the expected return
is highly attractive in relation to the risk, and
we restate our Strong BUY recommendation for
CEDC €8.875% 2016 and CEDC $9.125% 2016.
Cioè se ne è parlato qualche giorno fa che porchetto la voleva prendere e l'hanno downgradata, portate sfiga
Moody’s just downgraded its rating of CEDC
from B1 to B2. The outlook has been put at
stable. The downgrade was a reality after
Moody’s since 4 March had CEDC on its watch
list for a downgrade. The downgrade follows the
weak Q4 2010 results and Moody’s
expectations of continued pressure on the
credit metrics at the short to medium term. The
stable outlook confirms Moody’s expectation of
a gradual improvement of the market
conditions in Russia and Poland in 2011. The
downgrade was anticipated by the market and
the bonds are unchanged following the
downgrade.
We expect significant improvement of the
market conditions in H2 2011, with resultant
increasing operating earnings. In the long term,
we are still very bullish about CEDC and regard
the company as strongly positioned to utilise
the ongoing consolidation in the Russian
market. On the other hand, we assess that the
present short-term momentum is against CEDC
and that the market demands a higher risk
premium until the market is convinced that
CEDC can attain the company’s guidance for
2011. We still assess that the expected return
is highly attractive in relation to the risk, and
we restate our Strong BUY recommendation for
CEDC €8.875% 2016 and CEDC $9.125% 2016.
Cioè se ne è parlato qualche giorno fa che porchetto la voleva prendere e l'hanno downgradata, portate sfiga
fabriziof
Forumer storico
Moody’s downgrades CEDC
Moody’s just downgraded its rating of CEDC
from B1 to B2. The outlook has been put at
stable. The downgrade was a reality after
Moody’s since 4 March had CEDC on its watch
list for a downgrade. The downgrade follows the
weak Q4 2010 results and Moody’s
expectations of continued pressure on the
credit metrics at the short to medium term. The
stable outlook confirms Moody’s expectation of
a gradual improvement of the market
conditions in Russia and Poland in 2011. The
downgrade was anticipated by the market and
the bonds are unchanged following the
downgrade.
We expect significant improvement of the
market conditions in H2 2011, with resultant
increasing operating earnings. In the long term,
we are still very bullish about CEDC and regard
the company as strongly positioned to utilise
the ongoing consolidation in the Russian
market. On the other hand, we assess that the
present short-term momentum is against CEDC
and that the market demands a higher risk
premium until the market is convinced that
CEDC can attain the company’s guidance for
2011. We still assess that the expected return
is highly attractive in relation to the risk, and
we restate our Strong BUY recommendation for
CEDC €8.875% 2016 and CEDC $9.125% 2016.
Cioè se ne è parlato qualche giorno fa che porchetto la voleva prendere e l'hanno downgradata, portate sfiga
non è la prima volta,d'altronde quando si ha a che fare con le ciofeche...
Entrare a questi prezzi, 100.4/100.5, mi sembra azzardato, se poi lo vuoi portare a scadenza potresti anche pensare di prenderlo intorno a 100 e dimenticarlo nel cassetto.
malvi88
Forumer attivo
La mia idea, sciagure permettendo, era di prendere un corporate un po tosto come rendimento per portarlo a scadenza. L'idea mia era cmq per un taglio 1k e in euro. Avete idee?
- Stato
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HIGH YIELD e oltre, verso frontiere inesplorate, vol.3
