Research Update: Spain-Based KronosNet Downgraded To 'B' On Weaker-Than-Expected Performance Delaying Deleveraging; Outlook Stable

KronosNet Topco S.L. (KronosNet) is performing below our expectations in 2023 due to delays in passing on cost inflation to clients, difficulties integrating Comdata, and lower demand from existing clients in Europe in the second half of the year. Despite our forecast of an improvement in 2024, we no longer expect S&P Global Ratings-adjusted debt to EBITDA to decrease below 5x by year-end 2024. We therefore lowered our long-term issuer credit rating on KronosNet and its subsidiary, KronosNet CX Bidco 2022 S.L., to 'B' from 'B+'. We also lowered the issue rating on the group's senior unsecured €870 million term loan B (TLB) to 'B' from 'B+'. The recovery rating on the debt is unchanged at '3', indicating our expectation

...- KronosNet Topco S.L. (KronosNet) is performing below our expectations in 2023 due to delays in passing on cost inflation to clients, difficulties integrating Comdata, and lower demand from existing clients in Europe in the second half of the year. - Despite our forecast of an improvement in 2024, we no longer expect S&P Global Ratings-adjusted debt to EBITDA to decrease below 5x by year-end 2024. - We therefore lowered our long-term issuer credit rating on KronosNet and its subsidiary, KronosNet CX Bidco 2022 S.L., to 'B' from 'B+'. We also lowered the issue rating on the group's senior unsecured 870 million term loan B (TLB) to 'B' from 'B+'. The recovery rating on the debt is unchanged at '3', indicating our expectation of about 50% recovery in the event of default. - The stable outlook reflects our expectation that the realization of synergies with Comdata and easing macroeconomic conditions will help KronosNet reduce debt to EBITDA to 5.6x by year-end 2024 while generating positive...

Research Update