S&P Global Ratings on Sept. 20 revised the outlook on British guarantor loan provider Amigo Loans Ltd's issuer credit rating to negative from stable, while affirming the rating at B+.
The outlook revision took into account the firm's recently announced revised growth prospects, a sharp decline in loan growth, an increase in impairments and a further investment in the business. It reflects the agency's expectation that Amigo Loans will remain comfortably profitable, as a result of its high margins and resilient market position. However, prospects for the firm's financial risk profile are weaker than previously assumed, the agency said.
In August, the company said it would revise its business model by reducing the share of business that comes from repeat borrowers to roughly 20% from 38% amid regulatory scrutiny, the Financial Times reported. The move was expected to reduce the company's lending growth.
Moreover, S&P Global Ratings downgraded the firm's senior unsecured debt rating to B from B+ and its recovery rating to 5 from 4, which reflected an increase in Amigo Loans' priority debt and the agency's expectation of lower EBITDA growth for the company.
The negative outlook reflects the agency's expectation that the company could face greater pressure on its earnings and debt serving capacity over the next 12 months.
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.
