OREANDA-NEWS. February 16, 2015. Fitch Ratings has assigned Thomas Cook Finance plc's issue of EUR400m fixed-rate senior notes due 2021 a senior unsecured rating of 'B+'/'RR3'.

The fixed-rate notes are guaranteed by Thomas Cook Group plc (TCG; B/Stable). The rating is one notch higher than the IDR due to expected good recovery prospects under a going concern scenario. The notes rank pari passu with TCG's existing bank debt and senior unsecured notes. The proceeds will be used to pre-fund the company's EUR400m 6.75% notes due in 2015. Concurrent with the bond issue will be the cancellation of the additional bank facility that was arranged in May 2013 to support the repayment of the EUR400m 2015 bond.

Fitch affirmed TCG and the senior unsecured notes (B+/RR3) issued by Thomas Cook Finance plc on 7 January 2015. The affirmation reflected improved results in FY14 and the significant further cost-cutting achieved, which has led to improved profitability.

For TCG's Key Rating Drivers, see the previous rating action commentary dated 15 January 2015 at www.fitchratings.com.

RATING SENSITIVITIES
Positive: Future developments that could lead to positive rating action include:
- An enhanced EBIT margin of close to 4%
- Positive free cash flow generation
- Improved interest cover and lease-adjusted FFO gross leverage (including GBP700m for working changes) below 5.0x

Negative: Future developments that could lead to negative rating action include:
- Deterioration in EBIT margin below 2.5%, reflecting increased competition
- Liquidity headroom below GBP200m
- Increase in FFO gross leverage (as adjusted by Fitch) above 7.0x