Research Update: Sweden-Based Debt Collector Intrum 'BB/B' Ratings Affirmed; Outlook Remains Negative

Intrum's updated operating strategy for 2023-2026 includes dividend payments being contingent on the company achieving a lower leverage target, which implies a shift away from debt purchasing. A decrease in nonperforming loan (NPL) investments suggests that the company's revenue base may gradually rely more on its external servicing business, which includes collection-management services. This may reduce the debt on Intrum's balance sheet over the medium term, but the pace of deleveraging is uncertain and we see execution risks associated with the revised strategy. We have affirmed our 'BB/B' issuer credit ratings on Intrum, and our 'BB' issue rating on Intrum's senior unsecured notes. The recovery rating is unchanged at '4', indicating our expectation of average recovery (30%-50%; rounded estimate: 40%)

...- Intrum's updated operating strategy for 2023-2026 includes dividend payments being contingent on the company achieving a lower leverage target, which implies a shift away from debt purchasing. - A decrease in nonperforming loan (NPL) investments suggests that the company's revenue base may gradually rely more on its external servicing business, which includes collection-management services. - This may reduce the debt on Intrum's balance sheet over the medium term, but the pace of deleveraging is uncertain and we see execution risks associated with the revised strategy. - We have affirmed our '##/B' issuer credit ratings on Intrum, and our '##' issue rating on Intrum's senior unsecured notes. The recovery rating is unchanged at '4', indicating our expectation of average recovery (30%-50%; rounded estimate: 40%) in the event of a payment default. - The negative outlook indicates that we could downgrade Intrum if the company is unable to successively deliver progress toward its revised targets....

Research Update