S&P boosts Formula 1, rates loans BB

S&P said it upgraded Formula 1’s (Alpha Topco) issuer rating to BB from BB- and assigned BB ratings to its planned $725 million five-year term loan, $1.7 billion seven-year term loan B, and $500 million five-year revolver, to be issued by Delta 2 (Lux) Sarl in line with the issuer credit rating. The agency also assigned a BB rating to Formula 1’s new rated parent, Delta Topco Ltd.

“We intend to withdraw our existing rating on Alpha Topco and the group's current debt, comprised of the £2.9 billion term loan B and $500 million RCF, once the group has successfully closed its proposed refinancing transaction,” S&P said in a press release.

The agency noted Formula 1 is on track to report its highest-ever earnings of about $600 million S&P Global Ratings-adjusted EBITDA in fiscal 2022 according to its base-case forecast. “We expect the group to generate increased earnings in all of its key earnings buckets in 2022 versus 2021, including media revenue, race promotion fees, sponsorship and corporate hospitality.”

Additionally, S&P said the group will repay about $500 million of gross term debt during the refinancing, resulting in a forecast of adjusted debt at about 3x for fiscal 2022 and gross leverage excluding cash at the bank of about 4x.

The outlook is stable.

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