Garfunkelux Holdco 2 S.A.

The stable outlook reflects our expectation that Lowell will display resilient earnings and cash flows over the near term. This should result in interest coverage and leverage metrics that are more robust than previously forecast and commensurate with the 'B+' rating over the next 12 months. We would lower the rating if Lowell's leverage and coverage metrics weaken over the next 12 months. This could occur if the benefits of its recent transactions are offset by more delays and volatility in collections as a consequence of ongoing macroeconomic pressure from the COVID-19 pandemic, or Lowell sees a sharper decline in servicing revenue than we expect. Rating upside is unlikely at this time because, despite improvements, Lowell's credit metrics, especially interest

...Following a period of rapid, acquisitive expansion, the group is well positioned across its core European markets. Garfunkelux Holdco 2 S.A. (Lowell) is the second-largest player in our rated universe of European debt collection companies and S&P Global Ratings estimates that it had over ú3.4 billion remaining collections on Sept. 30, 2020. It focuses on consumer finance debt in well-established, closely regulated markets, including the U.K., Germany, Austria, Switzerland, and the Nordics. The group undertook a capital structure management exercise in October 2020 to manage its financial risk. The exercise aimed to refinance or repay the group's existing debt and extend maturities to 2025 and 2026. It also received a ú600 million capital injection from its parent. The group tapped its new bonds in December 2020 to repay its outstanding RCF balances. The two transactions stabilized Lowell's financial position. The October transaction reduced its gross debt burden and interest expenses, and...

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