Standard & Poor's assigns 'BB-' long-term rating to PBG, with stable outlook
- In line with the methodology applied by Standard & Poor’s, PBG's rating consists of two parts: company's business risk profile, which was assessed as fair, and its financial risk profile, assessed aggressive.
- The stable outlook reflects the agency's view that PBG will benefit from good prospects in the Polish construction industry and maintain solid operating profitability and capital structure.
- The assessment is the first step taken by PBG's Management Board towards restructuring of its debt, primarily through converting current debt into non-current debt and raising new financing, also on the Eurobond market.
Standard & Poor’s indicated that the rating is supported by PBG's leading position in Poland's construction market, which will benefit from a high level of planned investment in infrastructure projects and public facilities over the next few years, as well as solid and operating margins and sound capital structure for the rating level.
S&P stated that PBG's rating is limited by the Company's exposure to project-related execution risk in the cyclical and competitive construction industry. Furthermore, the rating is constrained by PBG's small size, weak cash flow profile, and limited diversity, especially its lack of geographic presence beyond its domestic market.
According to Standard & Poor’s, despite rapid growth organically and through acquisitions, PBG has maintained a solid capital structure. The agency expects that the closing of the acquisition of 50% plus one share in Rafako, a general contractor and power equipment manufacturer, will lead to temporary tightening of the covenant headroom. S&P also expects that pro forma debt-to-EBTIDA multiples should not significantly exceed 3x. Standard and Poor’s assumes that PBG will continue to pursue an overall moderate financial policy, which is an important rating factor.
The stable outlook reflects Standard & Poor’s assumption that PBG will maintain prudent risk management policies, that it will manage its liquidity profile to cover near-term cash needs and maturities, and that its moderate financial policy will continue.
Requesting corporate rating by PBG has been a part of the measures taken by the Management Board to restructure the PBG Group's debt.
Summary of the press release published by Standard & Poor’s will be available in English for seven days from the date of its publication at its website at www.standardandpoors.com.