Graanul - comment

Fitch has downgraded Graanul’s credit rating to B minus from B plus, citing refinancing risk as the primary concern. Notably, Fitch does not classify the recent Amend and Extend transaction as a distressed debt exchange, stating that Graanul continues to have viable alternative financing options. The remainder of Fitch’s commentary reiterates our well-established concerns: regulatory uncertainty in the United Kingdom, customer concentration, and a significant change in the business profile expected after 2027.

Earlier this week, Moody’s downgraded Graanul to Caa1 from B3, taking a different view by classifying the Amend and Extend as a distressed exchange. In contrast, S&P, which placed Graanul on negative watch, concurred with Fitch, viewing the transaction as opportunistic treasury management rather than a distressed scenario.

Irrespective of the differing assessments, the underlying uncertainty persists. The transaction leaves Apollo, the sponsor, in control at no additional cost. Bondholders receive an enhanced coupon, but continue to bear the risk of any earnings shortfall beyond 2026.