S&P rates Pepco, notes BB-

S&P said it preliminarily rated Pepco Group NV and its planned senior secured notes to be issued by subsidiary PEU (Fin) plc, BB- with a 3 recovery rating. The 3 recovery rating indicates meaningful recovery prospects (50%-70%; rounded estimate 65%) in a default scenario. The outlook is stable.

“Our ratings on Pepco reflect its position in the U.K. and across a cohort of eastern European countries and moderate debt to EBITDA of below 3x, but tempered by an aggressive expansion strategy and the overhang of the legacy debt located outside its restricted group,” S&P said in a press release.

“We expect Pepco's robust operating momentum will continue in 2023-2024, underpinned by the strong store development program, which contributed to historically healthy revenue growth. Pepco has expanded its store footprint over the past 10 years to nearly 4,127 in 2023 to date. Its expansion strategy focuses on developing in the domestic market and expanding in other European regions in a bid to expand its overall addressable market,” the agency added.

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