S&P rates Europcar notes CCC+

Standard & Poor’s said it placed on CreditWatch with positive implications the B long-term corporate credit ratings on Europcar Groupe SA and its wholly owned financing subsidiary, Europcar International SASU.

The agency also said it assigned a CCC+ rating to the proposed €475 million senior notes due 2022 to be issued by Europcar Notes Ltd. and placed the rating on Credit Watch with positive implications.

S&P also said it assigned a recovery rating of 6 to the proposed notes, indicating 0 to 10% expected default recovery.

The agency also said it corrected the B+ rating and 2 recovery rating on the €350 million revolving credit facility by reinstating those ratings after they were withdrawn in error in April,

S&P also affirmed the B issue rating and 4 recovery rating on the €350 million senior secured notes due 2021.

The ratings on the revolver and secured notes also were placed on Credit Watch with positive implications.

S&P also said it affirmed the B- ratings on the €324 million subordinated secured notes due 2017 with an unchanged 5 recovery rating, along with the CCC+ issue ratings on the €400 million subordinated unsecured notes due 2018 with an unchanged 6 recovery rating. These ratings will be withdrawn upon completion of the refinancing.

The CreditWatch placement follows news of Europcar’s planned initial public offering and new bond issue to partly repay existing corporate debt, the agency said.

If the IPO, refinancing and debt reduction go ahead as planned, S&P said it expects Europcar’s leverage ratios for 2015 and 2016 to be slightly stronger.

This could lead to an upgrade of the corporate credit rating, probably by one notch, the agency said.

The ratings are constrained by the competitive, cyclical and capital-intensive nature of the car-rental market, S&P said, and Europcar’s limited business and geographic diversity.

The ratings are supported by the group’s leading position and market share in Europe, where it is the clear market leader, the agency said.

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