Fitch rates Kaefer, notes BB

Fitch Ratings said it assigned German engineering and construction (E&C) services provider Kaefer Isoliertechnik GmbH & Co. KG an expected long-term issuer default rating of BB(EXP) with a stable outlook.

The agency also assigned an expected instrument rating of BB(EXP) to the group's proposed €250 million senior secured notes.

Fitch said the issuer default rating reflects the group's defensive and diversified business risk profile, which is in line with a strong BB category rating.

“The main rating constraints are the company's high leverage, small scale, as well as low, albeit resilient, profitability. Pro forma for the refinancing, Fitch-adjusted funds from operations (FFO) gross leverage is expected to exceed 4.0x in 2018,” the agency said in a news release.

However, we forecast de-leveraging with growing FFO generation and a normalisation of capex.”

Kaefer intends to use the bond proceeds to repay the existing bank debt, cover related fees and expenses and for general corporate purposes.

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