Scope Ratings reviews its ratings either yearly, or every six months in the case of sovereigns, sub-sovereigns and supranational organisations. Monitoring reviews are unrelated to the calendar that outlines public finance rating actions.

Scope completed the monitoring review on Masterplast Nyrt. including the current ratings on 11 November 2020. This monitoring note does not constitute a rating action nor does it indicate the likelihood of a credit rating action in the short term. The latest information on the credit ratings in this monitoring note along with the associated rating history can be found on www.scoperatings.com

Key rating factors

Masterplast’s rating is driven by its solid credit metrics, which benefit from a relatively high Scope-adjusted EBITDA interest cover ratio (last twelve months to end-September: 23x) as well as modest leverage (Scope-adjusted debt to Scope-adjusted EBITDA of 3.5x for the nine months to end-September 2020; last twelve months to end-September 2020: 4x). The rating is also supported by the company’s high exposure to the maintenance end market, which is less cyclical than the construction materials market, leading to more stable cash flows and less volatile margins.

The rating is mainly constrained by the company’s small overall scale, despite further strong revenue growth (+9% YoY), which lessens its ability to benefit from economies of scale or to offset the impact of economic cycles. The rating is also limited by relatively low but improving profitability (Scope-adjusted EBITDA margin for the last twelve months to end-September: 8.2% +1.3pp YoY). Scope judges diversification to be poor because Masterplast generates most of its revenues in one region (Europe) and is mainly exposed to one segment (construction materials).

Masterplast plans to issue a HUF 6bn senior unsecured corporate bond in Q4 2020 under the MNB Bond Funding for Growth Scheme. Proceeds are earmarked for further capital expenditure as well as acquisitions and to temporary refinance short-term debt. The bond’s tenor is seven years and it will amortise from year four to year seven in equal instalments. The coupon will be fixed and payable on an annual basis.

The rating case for Masterplast’s B+/Positive issuer rating remains unchanged, backed by Q3 2020 results in line with Scope’s expectations despite the Covid-19 outbreak and its impact on the economy. The planned second bond issuance under the MNB Bond Funding for Growth Scheme does not alter Scope’s above-average recovery expectations for senior unsecured debt in a hypothetical default scenario. However, Scope has not added one potential notch of uplift to the issuer rating due to risk and the possibility that senior secured debt will increase in the path to default (volatility of capital structure and share of senior unsecured debt). This is reflected in the B+ rating for Masterplast’s senior unsecured debt.

The methodology applicable for the reviewed ratings and rating Outlooks (Corporate Rating Methodology, published on 26 February 2020) is available on https://www.scoperatings.com/#!methodology/list.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst Philipp Wass, Executive Director

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