S&P changes Federal Passenger view

S&P said it revised its outlook on Federal Passenger Co. JSC to negative from stable and affirmed the BBB-/A-3 long- and short-term issuer credit ratings on the company.

The agency said the revision reflects an expectation of a sharp increase in capital expenditures at Federal Passenger, largely debt funded, in 2018 and 2019.

This is likely to lead to a decrease in the group's ratio of funds from operations to debt to about 30%-32% in 2018 and 23%-25% in 2019, while its adjusted debt-to-EBITDA ratio should rise to 2.3 times to 2.5 times in 2018 and 2.8 times to 3 times in 2019, if the capex program is fully implemented as planned, S&P explained.

“This represents much higher leverage than our estimate of FFO to debt of about 105% and debt to EBITDA of below 1x in 2017,” the agency said in a news release.

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