Research Update: Enerflex Ltd. Outlook Revised To Positive; 'BB-' Rating Affirmed; Debt Rating Raised

Enerflex Ltd., a Canadian midstream energy company, has repaid approximately $193 million of debt since the beginning of 2023. We forecast S&P Global Ratings-adjusted debt to EBITDA will be approximately 2.6x in 2024 and will continue to decline to 2.0x-2.5x as the company completes integration and books its growing engineering systems backlog in 2025, which will bring leverage in line with the company-adjusted 1.5x-2.0x target. As a result, we revised the outlook on Enerflex to positive from stable and affirmed our 'BB-' issuer credit rating on the company. At the same time, we raised our issue-level rating on the company's senior secured $625 million notes due 2027 to 'BB' on improved recovery prospects following the repayment of its term loan

...- Enerflex Ltd., a Canadian midstream energy company, has repaid approximately $193 million of debt since the beginning of 2023. We forecast S&P Global Ratings-adjusted debt to EBITDA will be approximately 2.6x in 2024 and will continue to decline to 2.0x-2.5x as the company completes integration and books its growing engineering systems backlog in 2025, which will bring leverage in line with the company-adjusted 1.5x-2.0x target. - As a result, we revised the outlook on Enerflex to positive from stable and affirmed our '##-' issuer credit rating on the company. - At the same time, we raised our issue-level rating on the company's senior secured $625 million notes due 2027 to '##' on improved recovery prospects following the repayment of its term loan A. Our '2' recovery rating on this debt indicates our expectation for substantial (70%-90%; rounded estimate: 70%) recovery in the event of a payment default. - The positive outlook reflects our expectation for a further decline in S&P Global...

Research Update