The rating has been withdrawn for business reasons.
The latest information on the rating, including rating reports and related methodologies, is available on this LINK .
Rating action
Scope Hamburg has downgraded the issuer credit rating of Helvetia Environnement Groupe SA to CCC- from CCC+. The further downgrade derives from the still pending securing of a refinancing facility for the CHF 75m 2017/22 public green bond due for repayment on 26 July 2022. The agency`s most recent expectation regarding the financial closure of such a facility three months before maturity (“by April 2022”) was eventually not met, which is why Scope Hamburg lowered the issuer rating to CCC-.
Subsequently, Scope Hamburg has withdrawn the ratings for business reasons, as the rating service agreement between Helvetia Environnement and Scope Hamburg (at the time of signing: Euler Hermes Rating) was terminated. Scope Hamburg will no longer provide ratings or analytical coverage for Helvetia Environnement Groupe SA.
Rating rationale
The downgrade to CCC- is driven by a further revision of our assessment of the company’s financial risk profile. The revision reflects our unfulfilled expectations regarding a successful securing of a refinancing facility for the CHF 75m green bond maturing on 26 July 2022 by April 2022 at the latest. Our expectations were detailed in our section on upgrade- / downgrade factors of our last rating action release published on 12 January 2022 („Scope Hamburg downgrades Helvetia Environnement’s issuer rating to CCC+ / watch uncertain from B / negative“). The group’s current debt maturity profile is solely concentrated around this bond, which is the only long-term financial debt instrument in the company’s capital structure. The pending situation further aggravates the already increased refinancing risks in our view, keeping the group’s short-term liquidity profile deeply inadequate with a very high dependence on the successful attraction of new external financing on short notice. With the beginning of 2022 the company had mandated a bank to arrange a syndicated credit facility with an indicative syndication timeline for collecting firm commercial commitments of participating banks not later than April 2022. Currently, the company anticipates signing/closing and syndication completion by the end of May 2022.
The business risk profile, assessed at BB-, is mainly driven by the company’s weak geographical diversification in comparison to other (larger) European peers. This leads to a concentration of the groups activities on the highly fragmented domestic Swiss waste collection market, which is characterized by high competitive pressure, especially at tender processes, and a generally low sector profitability for waste collection services. Scope also notes a growing concentration of invested funds in recycling facilities which leads, in our opinion, to increasing business risks due to a growing exposure to fluctuating global prices for recyclable or scrap materials. Business operations were impacted by the pandemic crisis throughout 2020/21, especially with view to waste collection activities which still remain behind pre-crisis levels. Nevertheless, structural long-term growth drivers such as economic growth, demography, private consumption or increasingly stricter environmental regulations altogether contribute to an overall low to moderate market cyclicality and steady growth prospects for the Swiss waste management market in Scope’s view. Over the long run Scope considers the pandemic situation as extraordinary in its assessment on market cyclicality. High barriers to entry the Swiss waste market and the company’s established market position in Switzerland, driven by a well diversified Swiss-based customer portfolio of municipal and commercial clients, remain supportive factors in our business risk assessment.
No driver of this credit rating action is considered an ESG factor.
Outlook and rating-change drivers
Not applicable as the rating has been withdrawn.
Stress testing & cash flow analysis
No stress testing was performed. Scope Hamburg performed its standard cash flow forecasting for the company.
Methodology
The methodologies used for these Credit Ratings and/or Outlook, (Corporate Rating Methodology, 6 July 2021), are available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
Scope Ratings GmbH, Scope Ratings UK Limited and Scope Hamburg GmbH apply the same methodologies/models and key rating assumptions for their credit rating services.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Basic Principles for Assigning Credit Ratings and Other Services 2 May 2022’, published on https://scopehamburg.com/seiten/Principles_20220502.pdf. Historical default rates of the entities rated by Scope Hamburg can be viewed in the ‘Credit Rating Transition and Default Study Feb. 2021’ at https://scopehamburg.com/seiten/Validation_Update_31Dec21.pdf. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): https://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml. A comprehensive clarification of Scope Hamburg’s definitions of default and Credit Rating notations can be found at https://scopehamburg.com/seiten/Principles_20220502.pdf. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.
Solicitation, key sources and quality of information
The Rated Entity and/or its Related Third Parties participated in the Credit Rating process.
The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity and Scope Hamburg’s internal sources.
Scope Hamburg considers the quality of information available to Scope Hamburg on the Rated Entity or instrument to be satisfactory. The information and data supporting the Credit Ratings originate from sources Scope Hamburg considers to be reliable and accurate. Scope Hamburg does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and/or Outlook and the principal grounds on which the Credit Ratings and/or Outlook are based. Following that review, the Credit Ratings were not amended before being issued.
Regulatory disclosures
These Credit Ratings and/or Outlook are issued by Scope Hamburg GmbH, Ferdinandstraße 29-33, D-20095 Hamburg, Tel +49 40 524724-170.
Lead analyst: Matthias Peetz, Senior Analyst
Person responsible for approval of the Credit Ratings: Werner Stäblein, Managing Director
The Credit Ratings/Outlook were first released by Scope Hamburg or its predecessor on 7 June 2017. The Credit Ratings/Outlook were last updated on 11 January 2022.
Potential conflicts
See www.scoperatings.com under Governance & Policies/EU Regulation/Disclosures for a list of potential conflicts of interest related to the issuance of Credit Ratings.
Conditions of use/exclusion of liability
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