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Investing.com -- S&P Global Ratings has revised Sabre Corp.’s outlook to negative while affirming its ’B-’ rating, citing weak credit metrics stemming from suppressed profitability and high debt service costs.
The travel technology company plans to use proceeds from proposed senior secured notes due 2029 and 2030, along with a term loan B due 2029, to fund debt refinancings. This includes an exchange offer for its 8.625% senior secured notes due June 2027, 11.250% senior secured notes due December 2027, and a portion of its 10.750% senior secured notes due November 2029.
While the transaction improves Sabre’s debt maturity profile, S&P calculates that total cash interest costs will increase due to higher coupon rates in the proposed debt compared to the refinanced debt.
S&P now forecasts Sabre to generate moderately negative free operating cash flow in 2025 and 2026 before producing slightly positive cash flow in 2027. The rating agency expects EBITDA cash interest coverage to remain between 1.1x and 1.2x from 2025 through 2027, an improvement from 0.8x in 2024 but still thin relative to ’B-’ rated peers.
For 2025, S&P projects Sabre will report approximately $2.9 billion in revenue and $500 million in adjusted EBITDA, well below 2018 levels of about $3.9 billion and $800 million respectively. The agency forecasts modest revenue growth of 2%-5% and EBITDA growth of 5%-10% in 2026 and 2027.
S&P noted that Sabre is the second-largest global GDS (Global Distribution System) provider with about 35% of global air bookings share in 2024. Despite this strong position, the company faces challenges including potential disintermediation, uncertain corporate travel recovery, and environmental considerations.
The rating agency raised concerns about macroeconomic uncertainty, including U.S. administration policies, geopolitical conflicts, and an unfavorable product mix that has caused Sabre to underperform relative to previous forecasts. S&P economists have raised their estimate of a U.S. recession probability in the next 12 months to 30%.
S&P could lower Sabre’s rating if the company underperforms relative to forecasts resulting in sustained negative cash flow, if liquidity deteriorates, or if future debt refinancing transactions appear distressed rather than opportunistic.
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