Moody's downgrades Brunswick Rail's rating to "B3" from "B2", outlook - "negative"
MOSCOW. Dec 24 (Interfax) - International rating agency Moody's has downgraded the rating of leasing operator Brunswick Rail Limited (BRL).
"Moody's Investors Service has today downgraded Brunswick Rail Limited's (BRL) corporate family rating (CFR) to B3 from B2 and probability of default rating (PDR) to B3-PD from B2-PD," the press release said.
"Moody's has also downgraded to B3 from B2 the senior unsecured rating on the $600 million Eurobond issued by Brunswick Rail Finance Limited and guaranteed by BRL's key operating subsidiaries. The outlook on all the ratings is negative," Moody's said.
"Today's downgrade reflects the recent considerable volatility of the rouble, which has created increased uncertainty over the evolution of BRL's financial metrics and, over time, liquidity. Moody's expects that BRL's credit metrics are likely to deteriorate more than previously expected because of the recent dramatic rouble depreciation, along with the increased likelihood of potential macroeconomic challenges undermining BRL's revenues and its customers' payment discipline," the statement said.
"The negative outlook for BRL's ratings reflects (1) the risk that (i) persistent pricing pressure in a challenging macroeconomic environment and rouble depreciation could affect BRL's financial metrics more than Moody's currently anticipates and (ii) customers' payment discipline, which has been good so far, could deteriorate; and (2) the high risk that the company will breach a financial covenant under a sizeable bank loan in 2015," Moody's said.
"An upgrade to the ratings in the next 12-18 months is unlikely," the statement said.
Brunswick Rail specializes in the operation and financial leasing of rolling stock. The company was established in 2004. As of July 2014, the Brunswick Group owned 24.4% of the operator (including Martin Andersson with 15.8% and Gerard De Geer with 8.6%), Macquarie Russia and CIS Infrastructure Fund owned 15.1%, International Finance Corporation (IFC) - 13.1%, Sumitomo - 5.4%, VTB Capital - 7%, UFG - 5.6% and Andre Hoffman - 5.2%. The fleet includes around 25,500 rail cars.