The latest information on the rating, including rating reports and related methodologies, is available on this LINK.

Rating action

Scope Ratings GmbH (Scope) has today assigned a SD issuer rating to the Hungarian construction company Vasútvill Kft. Scope has also assigned an SD rating to Vasútvill’s senior unsecured debt and has assigned a D rating to the company’s senior unsecured bond (ISIN HU0000360151).

Rating rationale

The assignment of an SD (Selective Default) issuer rating to Vasútvill and a D (Default) rating to the senior unsecured bond (HU0000360151) follows unsuccessful negotiations to reach a standstill agreement and the company’s failure to redeem its senior unsecured bond due on 3 June 2024. The possibility of this rating action was indicated by Scope in its previous rating announcement on Vasútvill (5 March 2024).

Following the downgrade of the senior unsecured debt rating to C on 5 March 2024, the accelerated repayment clause of the HUF 3bn bond was triggered, requiring the full bond notional to be repaid within 90 days, i.e. on 3 June 2024 (legal maturity date). Although Vasútvill announced, that it is in ongoing negotiations to sign a standstill agreement with its creditors MNB and MHB, neither a waiver nor a standstill agreement has been signed until the legal maturity date. The failure to redeem the HUF 3bn bond on the due date, meets Scope’s definition of default (Scope’s rating definition), as the company has experienced an uncured payment default on a material obligation.

Negotiations on a standstill agreement are ongoing. However, it remains uncertain as to when and if an agreement can be reached with the bondholders.

There is limited information available at this stage on a potential restructuring plan. Over the past few months, Scope has received information from Vasútvill that reflects the company's severe liquidity problems and the lack of recovery in its order book. Scope is of the opinion that a rapid recovery of the order backlog and thus an improvement of the operational visibility is not achievable in the short-term. Scope will closely monitor developments at Vasútvill, provided the necessary information is available in a timely and complete manner. If there is insufficient information to maintain the ratings, Scope may cease analytical coverage and withdraw the ratings.

Long-term debt rating

Scope has assigned a D (Default) rating to Vasútvill’s HUF 3bn senior unsecured bond (ISIN HU0000360151) after the issuer failed to redeem the outstanding amount due on 3 June 2024. Scope has also assigned an SD (Selective Default) rating to Vasútvill’s senior unsecured debt category.

Stress testing & cash flow analysis
No stress testing was performed. Scope Ratings performed its standard cash flow forecasting for the company.

Methodology
The methodologies used for these Credit Ratings, (Construction and Construction Materials Rating Methodology, 25 January 2024; General Corporate Rating Methodology, 16 October 2023), are available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at https://scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.

Solicitation, key sources and quality of information
The Credit Ratings were not requested by the Rated Entity or its Related Third Parties. The Credit Rating process was conducted:
With the Rated Entity or Related Third Party participation       YES
With access to internal documents                                          YES
With access to management                                                   YES
The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity and Scope Ratings' internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting the Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and the principal grounds on which the Credit Ratings are based. Following that review, the Credit Ratings were not amended before being issued.

Regulatory disclosures
These Credit Ratings are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings are UK-endorsed.
Lead analyst: Rigel Scheller, Director
Person responsible for approval of the Credit Ratings: Thomas Faeh, Executive Director
The Credit Ratings/Outlook were first released by Scope Ratings on 7 July 2020. The Credit Ratings/Outlook were last updated on 5 March 2024.

Potential conflicts
See www.scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings.

Conditions of use/exclusion of liability
© 2024 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Ratings UK Limited, Scope Fund Analysis GmbH, and Scope ESG Analysis GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope’s ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope’s ratings, rating reports, rating opinions, or related research and credit opinions are provided ‘as is’ without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope’s ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope’s credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings GmbH at Lennéstraße 5 D-10785 Berlin.