S&P turns NewDay view to stable

S&P said it revised its outlook on NewDay Group to stable from negative. At the same time, the agency affirmed the B+ issuer credit rating on NewDay and the B issue level rating on the notes issued by NewDay BondCo plc.

“The outlook revision reflects our view that U.K. economic trends are stabilizing. We believe that the U.K. is experiencing a relatively strong economic rebound in 2021, and we now assume GDP growth of 7%. This recovery is within the context of an exceptionally sharp GDP decline of 9.8% in 2020, but we are increasingly confident that the U.K. will recover its lost economic output fairly swiftly. Of particular benefit to credit card lenders such as NewDay, we now assume that unemployment will peak at a relatively manageable 5.4% in the fourth quarter of 2021, up from 4.7% currently,” S&P said in a press release.

“Despite a difficult 2020 for NewDay, we believe the group will return to more stable earnings in 2021 as credit conditions improve. NewDay's 2020 earnings were broadly in line with our expectations, with the group disclosing a statutory loss of £129 million for the year,” S&P added.

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