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Moody's Investors Service Inc.

Moody's Affirms Modulaire Group Holdings' Ratings, Flags Negative Outlook

Strategic Insights

— 1 min read

Moody's Investors Service has affirmed Modulaire Group Holdings Limited's (Modulaire) B2 corporate family rating (CFR) and the backed senior secured bank credit facility ratings of its EUR1.8 billion Term Loan B and EUR350 million revolving credit facility. The affirmation is driven by Modulaire's planned EUR 1.9 billion senior secured debt issuance, which will be used to repay its existing debt. However, the negative outlook reflects the lack of improvement in Modulaire's cash flow and leverage due to continued contraction in demand for its modular space and storage units.

Key Takeaways:

  • Modulaire'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.
  • The CFR continues to remain constrained by Modulaire's high leverage and weak interest coverage, which has not improved since its debt-funded acquisition of Mobile Mini UK in Q1 2023.
  • As of the end of March 2025, Modulaire's gross Debt/EBITDA leverage exceeded 7x (on the trailing twelve-month basis), while its interest coverage was below 2x in the same period.
  • Modulaire's business model has shown resilience, remaining cash flow-positive despite the lengthy slowdown in construction activity.
  • The company's CFR of B2 continues to incorporate a one-notch positive adjustment for business diversification, concentration, and franchise positioning.
  • The 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.
  • BCP V's Caa1 backed senior unsecured notes rating reflect their subordinated position within Modulaire's liability structure and higher expected loss.

Statistics:

  • Modulaire's gross Debt/EBITDA leverage exceeded 7x (on the trailing twelve-month basis) as of the end of March 2025.
  • The company's interest coverage was below 2x in the same period.
  • Modulaire's expected refinancing of its EUR 1.9 billion senior secured debt will be used to repay its existing EUR1.8 billion Term Loan B.

Sources:

  • Moody's Ratings (Moody's) news release dated [no date provided], affecting BCP V Modular Services Holdings III Limited, Modulaire Group Holdings Limited, and its subsidiaries.
  • Finance Companies principal methodology published in July 2024, available at https://ratings.moodys.com/rmc-documents/425167.

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