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Intrum Sells-Off As Moody’s Downgrade From B2[S] to B3[N]

CONSUMER STAPLES

New Profile: B3[N]/BB[N]/BB-[S]


  • Intrum's Debt/EBITDA leverage is expected to increase due to loss of portfolio income and EBITDA from the sold assets, despite a planned nominal debt reduction.
  • Post-Cerberus sale, Moody’s see Intrum's estiamted EBITDA -20%, leading to pro-forma Debt/EBITDA leverage of approximately 4.9x, compared to the previously forecasted 4x for 2024.
  • Intrum faces heightened execution risks in its strategic repositioning, amidst challenging conditions, increased refinancing costs, and stiff competition in debt purchasing/servicing.
  • Potential factors for an upgrade include credible plans to mitigate EBITDA reduction and refinancing pressures, achievement of 2025 deleveraging plans and solid performance without further leverage deterioration. Note that their 2.5x-3.5x deleveraging target was previously delayed to end-2025.
  • Intrum bonds are making another leg lower and steeper this morning with their longest EUR bond (28s) EUR 1.42 cheaper at EUR 86.90 (-EUR 4.70 YTD). Fitch had seen the sale as neutral to Intrum's ratings so this may have come as a surprise to the market.
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