Scope Hamburg has assigned a BB first-time issuer rating to Hungarian construction company KÉSZ Group. At the same time the proposed 2021/2031 bond issuance was rated BB based on preliminary terms. The BB first-time issuer rating is mainly driven by slightly increased business risks due to the inherent exposure to the cyclical and competitive construction industry and some notable concentration risks within the domestic construction sector and higher-risk CEE countries. Factors supporting the assessment mainly include KÉSZ’ leading and long-established market position, a history of robust working capital management, moderately strong credit metrics and an adequate financial flexibility. The rating outlook is stable.
The preliminary BB issuance rating was assigned to the proposed 2021/31 bond issue of KÉSZ
Holding Zrt. with a total proposed issuance volume of HUF 20bn. The rating was derived from the current issuer credit rating (BB), the bond’s proposed ranking, assumed reasonable creditor protections and a recovery expectation of > 50% in a hypothetical bond default scenario.
KÉSZ Group is one of the largest construction companies in Hungary whose story started as a family business in 1982. Today, KÉSZ Group’s two main divisions are KÉSZ Engineering & Technologies (KÉSZ ET; 90% of revenues), which includes the entire construction business of the group and KÉSZ Business Solutions (KÉSZ BS; 10% of revenues). As of today, KÉSZ has implemented more than 3,100 projects and has 5 million m2 references in more than 12 countries. The group employs more than 1,500 people (2019: 1,307) and announced revenues of around HUF 126bn on a preliminary basis for 2020 (2019: HUF 97.2bn).
Scope Hamburg GmbH (formerly Euler Hermes Rating GmbH) was founded in 2001 as an independent European rating agency focusing on issuer and issuance ratings. Scope Hamburg GmbH is registered as a credit rating agency (CRA) in accordance with Regulation (EC) No 1060/2009 of the European Parliament and Council (as amended) and is considered as an external credit assessment institution (ECAI) by the European Banking Authority (EBA). Scope Hamburg GmbH is a subsidiary of Scope Group, the leading European provider of independent credit ratings, ESG analyses and fund analyses.
Further information on this rating, the corresponding reports and applied methodologies can be found at www.scopehamburg.com
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