Research Update: AnaCap Financial Europe Outlook Revised To Negative On Persistently High Leverage; 'BB-' Rating Affirmed On Bond Buyback

Debt collection company AnaCap Financial Europe (AFE) has completed a buy-back of a portion of its outstanding senior secured bonds with a face value of €10 million. This has not led to a material shift in the group's financial metrics. Our base-case forecast is for leverage to remain high for the rating level, however, with gross debt to EBITDA at 4.5x-4.75x. We consider that a reduction in leverage in 2019 is unlikely. In addition, there is still some uncertainty about the path and volatility of AFE's leverage, given its asset profile. We are therefore revising the outlook on AFE to negative from stable. We are affirming our 'BB-' long-term issuer credit rating on AFE. We are also affirming our 'BB-'

...- Debt collection company AnaCap Financial Europe (AFE) has completed a buy-back of a portion of its outstanding senior secured bonds with a face value of 10 million. This has not led to a material shift in the group's financial metrics. - Our base-case forecast is for leverage to remain high for the rating level, however, with gross debt to EBITDA at 4.5x-4.75x. We consider that a reduction in leverage in 2019 is unlikely. In addition, there is still some uncertainty about the path and volatility of AFE's leverage, given its asset profile. - We are therefore revising the outlook on AFE to negative from stable. We are affirming our '##-' long-term issuer credit rating on AFE. We are also affirming our '##-' issue-level rating on AFE's senior secured bonds. - The negative outlook reflects that we could lower the rating on AFE if its leverage and coverage ratios remain volatile, and gross debt to EBITDA is above 4.75x by the end of the year....

Research Update