S&P cuts Rolls-Royce credit rating to junk on COVID-19 hit

FILE PHOTO: Rolls Royce engine of the first Fiji Airways A350 XWB airliner is seen at the aircraft builder’s headquarters of Airbus in Colomiers near Toulouse, France, November 15, 2019. REUTERS/Regis Duvignau/File Photo

LONDON (Reuters) – Ratings agency Standard & Poor’s cut engine maker Rolls-Royce’s (RR.L) credit rating to junk on Thursday, citing the disruption caused to global air travel from the COVID-19 pandemic.

S&P cut its rating for the British company to “BB” from “BBB-“, below investment-grade.

“Actions to contain the pandemic, including government-imposed social-distancing measures, travel restrictions, and stay-at-home orders, have suddenly and sharply reduced global demand for air travel,” S&P said in a statement.

In response, Rolls-Royce said it had taken swift action to boost its liquidity and cut costs to deal with the short-term impact of the health crisis.

“While it is disappointing to lose our investment grade rating with S&P, none of our borrowing facilities contain covenants or credit rating triggers that demand early repayment nor do any of our contracts with airlines,” the company said in a statement.

Reporting by Andy Bruce; editing by William James

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