S&P lowers to “CC” its issuer credit rating on Travelex

Maria Nikolova

S&P believes Finablr is unable to support Travelex, which is also facing liquidity constraints from additional working capital needs and a likely covenant breach under its revolving credit facility.

Standard & Poor’s today took rating actions regarding Travelex Holdings Ltd.

S&P lowers to ‘CC’ from ‘CCC’ its issuer credit rating on Travelex. Additionally, it is lowering its issue rating on the group’s €360 million notes due 2022 to ‘C’ from ‘CCC-‘ and the issue rating on the £90 million super senior RCF to ‘CCC’ from ‘B-‘. At the same time, S&P is removing all ratings on Travelex and its debt from CreditWatch negative, where it had placed them on March 4, 2020.

S&P explains that Finablr PLC (LON:FIN), the parent of Travelex, is facing serious liquidity pressure that is affecting its ability to operate. Furthermore, Finablr’s board has discovered unaccounted checks amounting to $100 million, bringing into question the group’s financial reporting. The readers of FinanceFeeds may recall that last week Finablr announced a potential insolvency appointment.

S&P therefore believes Finablr is unable to support Travelex, which is also up against liquidity constraints from additional working capital needs and a likely covenant breach under its revolving credit facility (RCF).

Regarding the negative outlook, S&P explains that this reflects its expectation that Travelex will very likely default in the near term in order to address its capital structure’s unsustainability, and that lenders will receive less principal or interest than originally promised.

On March 18, 2020, Travelex issued a statement claiming that it continues to take decisions, with input from PwC and supported by its other external advisors, regarding the operation of its business in the interests of all relevant stakeholders. Travelex noted that it has maintained a legal and financing structure within the Finablr Group that is capable of operating separately, on a stand-alone basis.

Travelex said back then its operations continue as usual with extensive on-going work and the support of its key financial stakeholders to mitigate the severe challenges created by reduced travel volumes as a result of the COVID-19 crisis.

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