Bulletin: Rolls-Royce PLC Recapitalization Boosts Liquidity, But Its Problems Remain

LONDON (S&P Global Ratings) Oct. 1, 2020--S&P Global Ratings said today that despite Rolls-Royce PLC's proposed recapitalization package, concerns remain over low flying hours, weak profitability, and high cash burn. We placed our ratings on Rolls-Royce (BB-/Watch Neg/--) on CreditWatch negative shortly after the company announced its results for the first half of 2020 (see "Rolls-Royce PLC Downgraded To 'BB-' And Placed On CreditWatch Negative," published on Sept. 11, 2020). The proposed recapitalization package will not affect the CreditWatch placement. In our view, successful completion of all of the measures planned under the proposed £5 billion recapitalization package will boost the company's liquidity. It will also materially reduce the rate at which Rolls-Royce's adjusted debt is forecast to rise through

...October 1, 2020 LONDON (S&P Global Ratings) Oct. 1, 2020--S&P Global Ratings said today that despite Rolls-Royce PLC's proposed recapitalization package, concerns remain over low flying hours, weak profitability, and high cash burn. We placed our ratings on Rolls-Royce (##-/Watch Neg/--) on CreditWatch negative shortly after the company announced its results for the first half of 2020 (see "Rolls-Royce PLC Downgraded To '##-' And Placed On CreditWatch Negative," published on Sept. 11, 2020). The proposed recapitalization package will not affect the CreditWatch placement. In our view, successful completion of all of the measures planned under the proposed ú5 billion recapitalization package will boost the company's liquidity. It will also materially reduce the rate at which Rolls-Royce's adjusted debt is forecast to rise through 2020 and 2021. Under our current base case (and absent the ú5 billion package), we expect Rolls-Royce's S&P Global Ratings-adjusted debt to rise to more than ú6.5...

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