Lufthansa's Hybrid Bond Downgraded To 'CC' On Deferral Risk; Other Ratings Unchanged

FRANKFURT (S&P Global Ratings) May 25, 2021--S&P Global Ratings today said that it lowered its issue rating on Deutsche Lufthansa AG?s junior subordinated notes maturing in 2075 to 'CC' from 'CCC+'. Our other ratings on Lufthansa, including our 'BB-/B' long- and short-term issuer credit ratings and 'BB-' issue rating on the company's senior unsecured debt, are unchanged. The downgrade on the hybrid follows Lufthansa's announcement on May 19 that it will suspend coupon payments on the instrument until the drawn silent participations are repaid and the shares held by the government over the Economic Stabilisation Fund are sold. We understand that Lufthansa's decision to suspend the coupon payments is based on the EU Commission's view that these payments constituted a

...May 25, 2021 FRANKFURT (S&P Global Ratings) May 25, 2021--S&P Global Ratings today said that it lowered its issue rating on Deutsche Lufthansa AG's junior subordinated notes maturing in 2075 to '##' from '###+'. Our other ratings on Lufthansa, including our '##-/B' long- and short-term issuer credit ratings and '##-' issue rating on the company's senior unsecured debt, are unchanged. The downgrade on the hybrid follows Lufthansa's announcement on May 19 that it will suspend coupon payments on the instrument until the drawn silent participations are repaid and the shares held by the government over the Economic Stabilisation Fund are sold. We understand that Lufthansa's decision to suspend the coupon payments is based on the EU Commission's view that these payments constituted a violation of the state aid regulations of the EU Temporary Framework, under which the 9 billion state aid package was provided to Lufthansa last year, and not an unwillingness or inability to pay. The potential nonpayment...

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