Moody's changed its outlook on U.K.-based real estate company Orbit Group Ltd. to negative from stable, and affirmed its A2 issuer rating on the company.
The rating agency also affirmed its A2 senior secured debt rating on Orbit Capital PLC.
Moody's attributed the change in outlook to the company's plans to considerably increase capital expenditure, which could weaken the company's liquidity cover metric to 0.82x from a projected 2.36x in fiscal year 2018, and could continue to lower it over the next three to four years. The rating agency also credited the change to the company's proposed increase in market sales, giving it the most exposure to commercial activities among its rated housing peers.
The rating affirmation reflects Orbit's strong cash flow volatility interest and healthy social housing letting interest in fiscal year 2017, which is in line with its A2-rated peers, and the company's strong market position in the Midlands of England. Orbit's unencumbered assets also enhance its borrowing capacity, Moody's noted.
