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Investing.com -- S&P Global Ratings has upgraded the credit rating of Asmodee Group AB (Asmodee) to ’BB-’ from ’B’, citing the company’s deleveraging and public financial policy. The rating agency has also removed Asmodee from CreditWatch placement, following the redemption of €300 million of its €940 million senior secured notes issued in December 2024. The debt repayment was made possible by a €400 million capital injection from Asmodee’s former parent company, Embracer Group AB, and the company’s listing as an independent entity on the Nasdaq Stockholm stock exchange on Feb. 7, 2025.
The debt repayment has significantly reduced the company’s financial risk profile. S&P Global Ratings now forecasts the group’s debt to EBITDA ratio to be about 3.0x for the fiscal year 2025, which ends on March 31, 2025. This is a substantial reduction from the previously expected ratio of 5.5x.
The recovery rating for Asmodee remains at ’3’ but the recovery estimate was raised to 65% from 50%. The stable outlook reflects S&P Global Ratings’ expectations that the debt to EBITDA ratio will remain stable at about 3.0x and funds from operations (FFO) to debt at about 17%-20% over the next 12-18 months.
Asmodee’s operating performance over the first nine months of fiscal 2025 remained in line with expectations. Revenue growth of about 11.3% was primarily driven by strong consumer interest in games published by Asmodee, including established intellectual properties like ’Catan’ and ’Dobble/Spot-it!’, and new releases such as ’LEGO! Monkey Palace’ and a new set of ’Star Wars Unlimited’.
Despite higher operating costs due to increased marketing activities and shipping costs, the company’s EBITDA is expected to be about €200 million in fiscal 2025. Asmodee’s FOCF after leases generation remained strong in the first nine months of fiscal 2025, thanks to limited capital expenditure required for business development and a limited amount of fixed charges for the group. However, the company faced a significant increase in interests and fees paid during fiscal 2025 due to several capital structure changes during the year. As a result, S&P Global Ratings expects FOCF after leases of about €60 million in fiscal 2025.
S&P Global Ratings could lower the rating on Asmodee if there is a material deviation from the group’s current financial policy commitment, for example, if the company finances new acquisitions or shareholders distributions through increasing debt in a marked departure from expectations. On the other hand, the rating could be raised if Asmodee significantly outperforms current expectations, increasing the scale of its operations, while improving its profitability materially.
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