S&P lowers Dufry, debt, rates notes BB

Standard & Poor's said it lowered its long-term corporate credit rating on Dufry AG to BB from BB+.

The outlook is positive.

At the same time, the agency lowered its issue ratings on the company's existing senior unsecured debt facilities, including a €500 million bond due 2022, a CHF 900 million (about €870 million) revolving credit facility due 2019 and $500 million notes due 2020, to BB from BB+. The recovery rating remains at 4, indicating an expectation of average recovery, in the higher half of the 30%-50% range, in the event of a payment default.

All ratings were removed from CreditWatch negative, they were placed on April 1.

In addition, S&P assigned a BB rating to Dufry's proposed senior unsecured notes. The recovery rating is 4, indicating an expectation of average recovery, in the higher half of the 30%-50% range.

The downgrade follows the agency’s expectation that the completion of Dufry's acquisition of competitor World Duty Free (WDF) in the second half of 2015 for about CHF 3.8 billion (roughly €3.67 billion) will weaken its debt metrics and bears integration risk, given the size of the transaction. The company will finance the transaction with its recently conducted CHF 2.2 billion capital increase and up to CHF 1.6 billion of additional debt.

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