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 a gradual improvement of interest coverage and leverage metrics, which, nevertheless, will remain commensurate with the 'B+' rating over the next 12 months. We would lower the rating if Lowell's leverage and coverage metrics materially weaken over the next 12 months such that its cash-adjusted debt-to-EBITDA ratio was greater than 6.0x. Although not our base case, this could follow significant pressure on Lowell's collections and a sharp decline in servicing revenues as a consequence of rising macroeconomic risks. Ratings upside is unlikely over the next 12 months because, despite improvements, Lowell's non-cash-adjusted credit metrics, especially interest coverage

...Following a period of rapid, acquisitive expansion, the group is well positioned across its core European markets. Garfunkelux Holdco 2 S.A. (Lowell) is one of the largest debt collection companies in Europe, with 120-month estimated remaining collections of ú3.6 billion at year-end 2021. It focuses on consumer finance debt in well-established, closely regulated markets including the U.K., Germany, Austria, Switzerland, and the Nordics. The potential acquisition of Hoist Finance UK, which is subject to FCA approval, will further strengthen Lowell's market position in the U.K. credit market, while being leverage neutral. We expect that FCA will likely approve the acquisition and the transaction will be closed by the end of third quarter 2022. The acquisition brings around ú585 million of additional collections over the next 180 months to Lowell's U.K. business. The transaction will bring growth to Lowell's franchise in the U.K., enable it to expand its business in the nonperforming unsecured...

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