S&P ups Covis, rates loan B+

S&P said it raised its ratings for Covis Finco Sarl and its first-lien term loan to B- from SD, selective default, and D, respectively. The agency revised the recovery rating on the loan to 3, with recovery prospects in the 50%-70% range (rounded estimate 60%). S&P also assigned B+ and 1 recovery ratings to Covis’ new super-senior loan facility due in 2027 and withdrew the rating on its repaid second-lien loan. The 1 recovery rating indicates recovery prospects in the 90%-100% range (rounded estimate 95%).

Through a debt restructuring, Covis wiped away about $450 million in debt and secured a new $65 million super-senior loan.

“Covis' liquidity is now adequate, in our view, which supports our B- rating, but it remains subject to potential interest rates volatility. Despite our anticipation of negative FOCF generation in 2023 of about $15 million-$20 million, the company does not face material short-term liquidity risks. This supports the current upgrade to B- from SD,” S&P said in a press release.

The agency said it forecasts Covis’ EBITDA margin to widen to 28%-30% in 2023.

The outlook is negative.

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