S&P Global Ratings downgraded issuer credit ratings of Macquarie Infrastructure Corp. and its subsidiary ITT Holdings LLC to BB+ from BBB-.
The rating action reflects an EBITDA decline at ITT and a "less diverse cash flow" at Macquarie following the sale of the Bayonne Energy Center and the expected sale of its renewable business, S&P Global Ratings analysts wrote in a March 15 note. The outlook on the companies is stable.
S&P Global Ratings also cut issue-level ratings on both companies' senior unsecured debt to BB+ from BBB- and assigned a recovery rating of 3.
Responding to the downgrade, Macquarie said it anticipates no material impact.
"The successful sales of the Bayonne Energy Center and other, smaller businesses in 2018, together with the pending sales of our portfolio of wind and solar power generation businesses, have sharpened our strategic focus and strengthened our balance sheet although modestly reduced the diversity of our cash flows," Macquarie Infrastructure CEO Christopher Frost said in a separate news release. "Taken together with the decreased contribution from [ITT], while repurposing and repositioning investments continue, S&P has concluded that [Macquarie] should be rated under S&P's corporate methodology and that a one-notch downgrade is appropriate."
The company expects a net-debt-to-EBITDA ratio in the range of 4x to 4.25x for 2019. Most of its debt does not require refinancing until 2025, the company noted.
Approximately $750 million of Macquarie's senior convertible notes due 2019 and 2023 will be affected by the rating action, according to S&P Global Ratings.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.