S&P upgrades Cirsa, rates notes B+

S&P said it raised its ratings for Cirsa Enterprises SAU to B+ from B and its €356 million pro forma senior secured PIK notes to B- from CCC+. The agency also assigned a B+ rating to its planned €600 million of senior secured notes.

“The upgrade reflects Cirsa's strong operating performance, which supports further deleveraging such that we expect S&P Global Ratings-adjusted leverage to improve to about 4.5x in 2024. Market share gains–through a combination of organic growth and disciplined M&A activity–and overall industry recovery led to year-on-year revenue growth of 21.5% for the nine-month period ended Sept. 30, 2023,” S&P said in a press release.

The agency added, “We expect Cirsa to sustain revenue growth at about 5%-8% in 2024, thanks to its retail and online operations.”

It plans to use the proceeds to redeem its €390 million of its 2025 senior notes, partially repay the payment-in-kind (PIK) notes issued by LHMC Finco 2 Sarl, and repay 10% of its 10 3/8% senior notes due 2027, in a transaction the agency said it considers leverage neutral because it already consolidated the PIK.

The outlook is stable.

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