Fitch rates Constellation Automotive

Fitch Ratings said it assigned Constellation Automotive Ltd. an expected B- senior secured debt rating with an RR4 recovery rating. Its new term loan issue along with other senior secured debt are part of a planned recapitalization of Constellation Automotive Group Ltd.

“Following the planned recapitalization alongside a parent distribution payment of around £400 million, we expect financial leverage to rise to 9x in FY22, a level higher than Fitch-rated peers' and a key rating constraint at the group's B- IDR. Furthermore, the sizeable parent distribution highlights an aggressive financial policy and a willingness to keep the balance sheet leveraged. Nevertheless, we are confident in the group's deleveraging abilities via earnings growth and forecast steady deleveraging to around 7.5x by end-2024,” the agency said in a press release.

Post-transaction, Fitch said it expects to affirm CAG's long-term issuer default rating at B- with a stable outlook.

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