S&P cuts IGD Siiq

S&P said it lowered its ratings for IGD SIIQ SpA and its senior unsecured notes to BB from BB+ and placed the ratings on CreditWatch with negative implications.

IGD's €400 million bond will mature in November of 2024, and it represents about 40% of the company's total gross debt outstanding.

“Given current rising interest rates, we forecast a significantly higher coupon for IGD's refinancing needs. This will likely pressure its EBITDA interest coverage ratio to below 2.4x over our forecast horizon, breaching our threshold for a BB+ rating. We also understand the company's financial policy is to refinance upcoming debt maturities at least 12 months ahead, but timing and execution risks remain and could weaken IGD's liquidity profile and capital structure rapidly over the coming months,” S&P said in a press release.

The higher interest costs “will be only partly compensated by robust inflation-led like-for-like rental income growth, which we forecast at 5%-6% in 2023 and 2%-3% in 2024,” the agency said.

The negative watch indicates the potential of a downgrade by at least a notch over the next 90 days if IGD does not secure adequate liquidity sources to cover its €400 million bond due in November 2024.

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