The international rating agency S&P has decided to raise PRISA's rating, which becomes B- with a stable outlook from CCC+ with a stable outlook. This decision comes just two weeks after another of the large rating agencies, Moody's, also improved PRISA's rating.
In its public note, S&P explains: “We raised PRISA's rating because its revenue and EBITDA growth exceeded our forecasts in 2023 and we anticipate that free cash flow generation will improve further in 2024 and 2025.” “The company's educational business, Santillana, exceeded our expectations, benefiting from growth in continued digitalization in the K-12 market in Latin America and strong book sales in Brazil and Argentina. In addition, PRISA's radio and print advertising proved to be more resilient than expected, despite difficult macroeconomic conditions,” the agency continues. Shares rise 6% on the stock market.
S&P analysts highlight that “the company also converted a large proportion of its bond issuance into equity in 2023, making the company's capital structure more sustainable.”
“We anticipate,” the rating agency maintains, “that revenues will remain stable in 2024 and grow again in 2025,” and underlines that “PRISA's free cash flow generation has improved and should become sustainably positive in 2025.”
S&P also highlights that PRISA's board has approved a new issuance of debentures necessarily convertible into shares, “which we anticipate will reduce its interest payments and support its free cash flow.” In addition, he notes that “the stable outlook indicates that we expect good performance over the next 12 months,” with improved cash generation and lower leverage.
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