Research Update: International Design Group Outlook Revised To Negative Amid COVID-19 Outbreak; 'B' Ratings Affirmed

In our view, International Design Group SpA (IDG) could suffer from a material decline in demand in 2020 following containment measures and deteriorating macroeconomic conditions due to the COVID-19 outbreak. We estimate IDG's leverage will materially increase, approaching 10x this year from 6.0x-6.5x in 2019, and anticipate EBITDA interest cover of about 2.0x in 2020. However, we believe the Italy-based company will not face significant liquidity deterioration in the next 12 months, thanks to solid cash on hand and no near-term debt maturities. We are affirming our 'B' issuer credit rating on IDG and revising the outlook to negative from stable. We are also affirming the 'B' issue rating on the company's senior secured notes. The negative outlook reflects our

...- In our view, International Design Group SpA (IDG) could suffer from a material decline in demand in 2020 following containment measures and deteriorating macroeconomic conditions due to the COVID-19 outbreak. - We estimate IDG's leverage will materially increase, approaching 10x this year from 6.0x-6.5x in 2019, and anticipate EBITDA interest cover of about 2.0x in 2020. However, we believe the Italy-based company will not face significant liquidity deterioration in the next 12 months, thanks to solid cash on hand and no near-term debt maturities. - We are affirming our 'B' issuer credit rating on IDG and revising the outlook to negative from stable. We are also affirming the 'B' issue rating on the company's senior secured notes. - The negative outlook reflects our view that IDG's EBITDA interest coverage could decline below 2.0x if containment measures remain for a prolonged period or if discretionary spending falls substantially....

Research Update