Fitch downgrades Voyage, notes

Fitch Ratings said it downgraded Voyage Bidco Ltd.’s long-term issuer default rating to B- from B; the outlook is stable.

The agency also downgraded Voyage Care BondCo plc's senior secured notes to BB-/RR1/100% from BB/RR1/100% and the second-lien notes to CCC+/RR5/24% from B-/RR5/23%.

Fitch said the downgrade of the issuer default rating reflects the growing pressure on margins and free cash flow (FCF) generation due to Voyage's strategy to expand substantially the high-growth yet lower-margin community-based care services business together with high leverage measured as funds from operations (FFO) adjusted gross leverage is expected to reach above 7.5 times in August 2017, one year before the reimbursement of the £222 million senior secured notes.

The agency acknowledges Voyage's position as the U.K.'s largest independent provider of support to people with learning disabilities and focus on high acuity care, which provides some resilience to government spending pressures.

However, Fitch said it considers such a high level of financial risks more consistent with a B- profile relative to sector peers.

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