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• Content META

  Title	Moody's Ratings assigns B2 ratings to Modular's new term loan B issuance and affirms senior secured ratings at B2; outlook remains negative
  ID	10827224
  External ID	7857656850
  Author	Unknown
  Published Date	June 24, 2025, 11:42 a.m.
  Summary	London, June 24, 2025 -- Moody's Ratings (Moody's) has today affirmed the B2 corporate family rating (CFR) of BCP V Modular Services Holdings III Limited (Modular). In addition, we affirmed Modulaire
  Tags	press-release
  URL	https://ratings.moodys.com/ratings-news/445680
  Sentiment	Negative: 0.91737    Neutral: 0.02723    Positive: 0.05540
  Relevance	0.03226

• Content Details

  Content ID	7088712
  Key	03352920-9441-4776-aac8-a258bb8f2945
  Content	London, June 24, 2025 -- Moody's Ratings (Moody's) has today affirmed the B2 corporate family rating (CFR) of BCP V Modular Services Holdings III Limited (Modular). In addition, we affirmed Modulaire Group Holdings Limited's (Modulaire) B2 backed senior secured bank credit facility ratings of its EUR1.8 billion Term Loan B and its EUR350 million backed senior secured revolving credit facility (RCF). We also affirmed the B2 backed senior secured debt ratings of the EUR750 million and GBP250 million senior secured notes issued by BCP V Modular Services Finance II PLC (BCP V II) and the Caa1 backed senior unsecured debt rating of the EUR435 million senior unsecured notes issued by BCP V Modular Services Finance PLC (BCP V), which are subsidiaries of Modular. In the same rating action, we assigned a B2 backed senior secured bank credit facility rating to Modulaire's new Term Loan B. The outlook on the issuers remains negative. This rating action is driven by Modular's planned EUR 1.9 billion senior secured debt issuance, the proceeds from which will be used to repay its existing EUR1.8 billion Term Loan B. A full list of affected ratings can be found at the end of this press release. RATINGS RATIONALE The affirmation of Modular's B2 CFR reflects the expected improvement in the company's debt maturity profile and liquidity following its proposed refinancing of the majority of the group's 2028 debt obligations. At the same time, the CFR continues to remain constrained by Modular's high leverage and weak interest coverage, which has not improved since its debt-funded acquisition of Mobile Mini UK in Q1 2023. The expected deleveraging following the transaction did not materialize due to lower than expected EBITDA growth, primarily driven by the prolonged weak demand in the construction sector. As of the end of March 2025, Modular's gross Debt/EBITDA leverage exceeded 7x (on the trailing twelve-month basis), while its interest coverage was below 2x in the same period. Given a high degree of operating leverage in its business, Modular's profitability should materially improve and its leverage decline with increased fleet utilization. Should a rebound of construction activity be delayed, we expect the company will increase utilization of its fleet in other sectors. That Modular has remained cash flow-positive despite the lengthy slowdown in construction activity, demonstrates its business model resilience. Modular's CFR of B2 continues to incorporate a one-notch positive adjustment for business diversification, concentration and franchise positioning. The adjustment reflects the strength of Modular's franchise, including its diversification across sectors and geographies and its leading position as a lessor of modular and storage units in most European and Australian markets. The CFR also reflects our view that Modular has low residual-value risk related to its modular and storage units, as the company is able to redeploy most of its units with minimal capital expenditures, thus extending their useful lives. Modulaire's backed Term Loan B and backed revolving credit facility, as well as BCP V II's backed senior secured notes, are pari-passu and all rated B2, reflecting their asset pledges and structural priority over unsecured debt. Following the planned refinancing, we expect the relative ranking of the rated obligations to remain the same. BCP V's Caa1 backed senior unsecured notes rating reflect their subordinated position within Modular's liability structure and higher expected loss. OUTLOOK The negative outlook reflects the lack of improvement in Modular's cash flow and leverage due to a continued contraction in demand for its modular space and storage units in the construction sector and other key markets. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Positive rating pressure is unlikely given the negative outlook. We could change the outlook to stable if we conclude that Modular has a path to reduce its leverage to at least 6.5x in the next 12 months, and if the company materially improves its debt servicing capacity. We could downgrade Modular's CFR if we conclude that the company is unable to improve its leverage and debt servicing capacity on a sustained basis, which would be indicative of long-term structural challenges related to overcapacity and reduced utilization rates in its key markets. The group's debt ratings will likely be downgraded together with the CFR. We could also downgrade the debt ratings if there are significant changes in the company's liability structure, which would result in a decrease in expected recoveries for secured and senior unsecured creditors in a default scenario. LIST OF AFFECTED RATINGS Issuer: BCP V Modular Services Holdings III Limited ..Affirmations: .... LT Corporate Family Rating, Affirmed B2 ..Outlook Actions: ....Outlook, Remains Negative Issuer: Modulaire Group Holdings Limited ..Assignments: .... Backed Senior Secured Bank Credit Facility (Foreign Currency), Assigned B2 ..Affirmations: .... Backed Senior Secured Bank Credit Facility (Foreign Currency), Affirmed B2 ..Outlook Actions: ....Outlook, Remains Negative Issuer: BCP V Modular Services Finance II PLC ..Affirmations: .... Backed Senior Secured (Foreign Currency), Affirmed B2 .... Backed Senior Secured (Local Currency), Affirmed B2 ..Outlook Actions: ....Outlook, Remains Negative Issuer: BCP V Modular Services Finance PLC ..Affirmations: .... Backed Senior Unsecured (Foreign Currency), Affirmed Caa1 ..Outlook Actions: ....Outlook, Remains Negative PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Finance Companies published in July 2024 and available at https://ratings.moodys.com/rmc-documents/425167. Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology. REGULATORY DISCLOSURES For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found on https://ratings.moodys.com/rating-definitions. For any affected securities or rated entities receiving direct credit support/credit substitution from another entity or entities subject to a credit rating action (the supporting entity), and whose ratings may change as a result of a credit rating action as to the supporting entity, the associated regulatory disclosures will relate to the supporting entity. Exceptions to this approach may be applicable in certain jurisdictions. For ratings issued on a program, series, category/class of debt or security, certain regulatory disclosures applicable to each rating of a subsequently issued bond or note of the same series, category/class of debt, or security, or pursuant to a program for which the ratings are derived exclusively from existing ratings, in accordance with Moody's rating practices, can be found in the most recent Credit Rating Announcement related to the same class of Credit Rating. For provisional ratings, the Credit Rating Announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. Moody's does not always publish a separate Credit Rating Announcement for each Credit Rating assigned in the Anticipated Ratings Process or Subsequent Ratings Process. These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website https://ratings.moodys.com. Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review. The Global Scale Credit Rating(s) discussed in this Credit Rating Announcement was(were) issued by one of Moody's affiliates outside the EU and is(are) endorsed for use in the EU in accordance with the EU CRA Regulation. Please see https://ratings.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating. Please see the issuer/deal page on https://ratings.moodys.com for additional regulatory disclosures for each credit rating. Anna Sherbakova Vice President - Senior Analyst Carola Schuler MD - Banking Releasing Office: Moody's Investors Service Ltd. One Canada Square Canary Wharf London, E14 5FA United Kingdom JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454 © 2025 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved. 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  Data Source Name	Quantexa News (#5)
  Data Source Type	news
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