Moody's prunes Praesidiad

Moody's Investors Service said it downgraded Praesidiad Group Ltd.’s corporate family rating to Caa3 from Caa1 and its probability of default rating to Caa3-PD from Caa1-PD. Concurrently, the agency lowered to Caa3 from Caa1 the instrument ratings of backed senior secured bank facilities borrowed by Praesidiad Ltd., a wholly owned subsidiary of the company.

“The rating downgrade reflects persistent weakness in Praesidiad's credit metrics and liquidity through the last twelve months ended March 2023, which Moody's projects will continue through the next 12-18 months. Under its base case, Moody's expects Praesidiad to continue to generate modest albeit stable EBITDA in the next 12-18 months notwithstanding the challenging macroeconomic environment, while reaping some benefits from restructuring initiatives to enhance profitability. At the same time, the outstanding financial indebtedness of around €430 million (Moody's-adjusted) remains very elevated with regards to the company's debt capacity.

“Praesidiad's forward-looking very high leverage (under the rating agency's base case) at around 9x-10x and the fact that nearly the entirety of the company's outstanding financial indebtedness comes due through the end of 2024 support Moody's view that Praesidiad's current capital structure is unsustainable at this juncture. As a result, the risk of a default or a distressed exchange (which constitutes a default under Moody's definition) to address upcoming debt maturities is very high.

“The Caa3 rating also reflects that a potential distressed exchange could lead to a material debt haircut and associated loss for creditors,” the agency said in a press release.

The outlook remains negative for both entities.

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