The rating action reflects the issuer’s payment default on its HUF 5bn (ISIN HU0000361449) senior unsecured guaranteed bond.

The downgrade is driven by the liquidity crunch the issuer is facing due to the covenant-related debt acceleration. The ratings are placed under review for a possible downgrade due to the immediate risk of selective default.

Inability to ramp up sales in the plastics division, impaired profitability of the textile division and no covenant cure may result in further downgrades in 2024, debt acceleration, a distressed liquidity situation and default by February 2025.

The Outlook change reflects the very slow sales ramp-up in the plastics division, below plan performance of the textile division and no cure foreseen for the covenant breach.

The downgrade reflects the company' switch in business focus, the early phase of its new products and the lack of supply contracts.

80% of the bond notional is guaranteed by the Hungarian Development Bank MFB.

The rating is driven by the solid development in 2020 and a positive growth perspective, but also negatively impacted by the high uncertainty regarding Textura’s new plastic business line that leads to a further increased volatility of credit metrics.