S&P slashes Covis

S&P said it downgraded Covis Finco Sarl’s issuer rating to CCC- from B-, the super-senior loan facility due in 2027 to CCC+ from B+ and the first-lien loan to CCC- from B-.

The recovery rating on the super-senior debt is 1, with recovery prospects in the 90%-100% range (rounded estimate 95%) and the recovery rating is 3 for the first-lien loan, indicating meaningful (50%-70%; rounded estimate: 60%) recovery in default.

“We estimate that the company has insufficient liquidity to meet its payment obligations in the near term. Based on cash on the balance sheet of about $35 million as of Dec. 21, 2023, an upcoming quarterly interest payment of $25 million, and mandatory debt amortization of $5 million, the company might experience a near-term liquidity shortage due to some adverse cash flow movements.

“As such, we believe a default, distressed exchange, or redemption appears to be inevitable within six months, absent unanticipated and significantly favorable changes in the issuer's circumstances,” S&P said in a press release.

The outlook is negative.

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