SI Group first-lien term loan flat post Fitch downgrade in quiet trading session

By Sara Rosenberg

New York, Dec. 22 – SI Group’s first-lien term loan held steady in a quiet pre-holiday secondary market on Friday following a downgrade by Fitch Ratings.

The first-lien term loan was quoted at 68¾ bid, 69¾ offered on Friday, unchanged from Thursday’s levels, a market source remarked.

Fitch cut the company’s long-term issuer default rating to CCC from B-, senior secured term loan and revolver to CCC+ from B and senior unsecured notes to CC from CCC.

“The downgrade reflects the deterioration in the company’s operating profile since 2021 and persisting through third quarter 2023, and an overwhelming interest burden, which resulted in negative free cash flow generation over the time period and EBITDA leverage spiking to 15.2x at LTM third quarter 2023,” the rating release said.

Fitch expects free cash flow generation to remain negative and for EBTIDA leverage to remain above 10x through the forecast horizon.

Furthermore, the rating is further constrained by a challenged liquidity position and the increased potential for near-term asset sales, the rating release added.

In October, Moody’s Investors Service downgraded the company’s corporate family, first-lien term loan and first-lien revolver ratings to Caa1 from B3, and senior unsecured notes rating to Caa3 from Caa2.

And, in September, S&P Global Ratings cut the company’s issuer credit and senior secured credit facilities ratings to CCC from CCC+ and unsecured notes rating to CCC- from CCC.

SI Group is a The Woodlands, Tex.-based developer and manufacturer of performance additives and intermediates.

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