Rating Action: Moody's downgrades Virgin Australia to Ca from Caa1 on missed coupon payment

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    Sydney, May 18, 2020 -- Moody's Investors Service has today downgraded Virgin Australia Holdings Limited's
    Corporate Family Rating to Ca from Caa1. Concurrently, Moody's has downgraded Virgin's senior unsecured
    and backed senior unsecured ratings to C from Caa2, and its backed senior unsecured MTN program to (P)C
    from (P)Caa2.
    "IMPORTANT NOTICE: MOODY'S RATINGS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY
    RETAIL INVESTORS. SUCH USE WOULD BE RECKLESS AND INAPPROPRIATE. SEE FULL
    DISCLAIMERS BELOW."
    The outlook on the ratings has been changed to developing from ratings under review.
    RATINGS RATIONALE
    The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil
    prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions
    and markets. The combined credit effects of these developments are unprecedented. The airline sector has
    been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and
    sentiment. More specifically, the weaknesses in Virgin's credit profile, including its exposure to global demand
    for travel, have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions. We
    regard the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications
    for public health and safety. Today's action reflects the impact on Virgin of the breadth and severity of the
    shock, and the broad deterioration in credit quality it has triggered.
    The rating action was prompted by Virgin missing the coupon payment on 15 May 2020 of its USD425 million
    8.125% 2024 bonds, after entering into voluntary administration on 21 April 2020.
    ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) CONSIDERATIONS
    Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial
    implications for public health and safety.
    FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
    Virgin is in voluntary administration and a number of potential bidders have expressed interest in purchasing
    the airline. Additionally, the second creditors' meeting has been scheduled for 22 August 2020.
    Any future change in rating will depend on the outcome of the voluntary administration process.
    PRINCIPAL METHODOLOGY
    The principal methodology used in these ratings was Passenger Airline Industry published in April 2018 and
    available at https://www.moodys.com/research/Passenger-Airline-Industry--PBC_1091811 . Alternatively,
    please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
    COMPANY PROFILE
    Virgin Australia Holdings Limited, headquartered in Brisbane, is Australia's second largest airline following its
    launch in 2000 and listing on the Australian Securities Exchange in 2003. As of fiscal 2019, it had generated
    revenues of AUD5.8 billion and carried around 24.8 million passengers.
    REGULATORY DISCLOSURES
    For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections
    Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and
    Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?
    docid=PBC_79004.

    courtesy of Bell Direct

    EPIC
    you can't make this stuff up

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