Ratings published by independent rating agencies are a key prerequisite for efficient and flexible access to the capital market. They assist debt capital market investors in evaluating the risk situation of companies and their financial instruments.
|Corporate Rating||Standard & Poor's||Moody's|
with negative implications
Latest Update Standard & Poor's
March 2020 – Standard & Poor's lowers its long-term corporate credit rating to "B-" from "BB-" on TUI and their Outlook is "CreditWatch with negative implications".
The coronavirus outbreak in Europe is diminishing holiday bookings for TUI AG, thereby affecting the majority of its tour operations and impairing its ability to generate earnings and cash flows. S&P expect lower bookings over the next two to three months, and possible customer refunds,since the majority of Tui's business is suspended. This will constrain the company's liquidity,unless Tui is able to access German state aid, which would likely help to bridge the company's liquidity over the coming months.The announced disposal of Hapag-Lloyd Cruises, when received, will somewhat support liquidity, but this transaction is only expected to close in summer 2020.
S&P has placed all ratings on TUI AG on CreditWatch with negative implications, given the uncertain severity and extent of the outbreak, and the company's constrained liquidity situation, until and unless the company receives state support.
Latest Update Moody's
March 2019 – Moody’s downgrades rating from Ba3 to B2. The outlook of TUI AG’s corporate family rating is on review.
TUI's rating reflects the company's announcement of the temporary suspension of the vast majority of TUI's operations until further notice due to the unprecedented spread of the coronavirus (COVID-19). Moody’s expects this will significantly impact TUI's earnings in fiscal 2020 and its cash outflow will be much higher than previously anticipated. Credit metrics in the fiscal year 2019/20 are expected to be materially weaker than expected for a rating in the single-B category. The review for possible downgrade reflects the uncertainties in terms of the duration of the operational disruption, the uncertainties to bridge the liquidity needs during an expected period of negative free cash flows as well as additional counterbalancing operational and financial measures to mitigate the impact on credit metrics.