24th Jul 2018 13:30
LONDON (Alliance News) - Moody's Investors Service on Tuesday assigned a Ba2 instrument rating to the new USD600 million second priority senior secured notes due 2026 to be issued by a subsidiary of industrial equipment rental company Ashtead Group PLC.
The proceeds from the issuance of the notes will be used to repay a part of the outstanding borrowings under the USD3.10 billion credit facility and cover related issuance costs.
Moody's said the new notes due 2026 are rated Ba2, one notch below the Ashtead's Ba1 corporate family rating, reflecting the size of the credit facility.
The ratings agency believes that the transaction will have an insignificant impact on the company's leverage as the proceeds from the issuance of the notes will be mostly used to repay debt.
Thus, Moody's expects Ashtead's adjusted leverage to remain at 1.7x as reported at the end of April. Moody's said it adjusted Ashtead's leverage for operating leases and pension liabilities.
Meanwhile, the stable outlook assumes that the company will maintain a conservative financial policy with no major debt-funded acquisitions, excessive shareholder returns, or fleet overspending.
Moody's noted that the rating upgrade is not expected in the "near future" due to the company's exposure to an inherently cyclical industry. However, it could arise if Ashtead further improves its client mix, tightens it leverage target and maintains a good liquidity position.
Meanwhile, fleet utilization and lower margins could result in rating downgrade, Moody's warned.
Shares in Ashtead were trading 1.6% higher on Tuesday at 2,361.00 pence each.
Related Shares:
Ashtead Group