S&P Global Ratings affirmed NH Hotel Group SA's B issuer credit rating and the BB- issue-level rating on its senior secured notes, and revised the outlook on the Spanish hotel operator to positive from stable.
The affirmation came on the back of NH Hotel's EBITDA of €233 million and EBITDA margin of 14.8% during the 2017 full year, which alongside the full repayment of €100 million notes, resulted in the rating agency's adjustment of leverage to 6.2x.
Moving forward, the positive outlook mirrors the possibility of an upgrade in the event that the hotelier logs "meaningful" positive free operating cash flow over the following 18-month period and lowers its debt through the conversion of its €250 million bond into equity.
S&P Global expects NH Hotel will gain from positive trends in the travel industry during the full-year 2018, owing to, among other reasons, the supportive macroeconomic environments in its key operating markets of Spain, Benelux, Germany and Italy.
The rating agency noted that the company's business is limited by its geographical concentration in Europe, which accounts for about 90% of total revenues, as well as its limited format diversification.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.