Will the new debt issuance impact FORV's credit rating and borrowing costs in the near to medium term?

Impact on credit rating – Adding €500 million of senior unsecured notes will lift FORV’s total debt load by roughly 10‑15 % (depending on the size of its existing balance‑sheet). In the short‑run rating agencies focus on leverage (net‑debt/EBITDA) and coverage (EBITDA/interest). If the proceeds are earmarked for growth projects that generate a clear incremental cash‑flow margin, the rating‑impact could be neutral. However, the issuance does not bring any immediate upside to cash‑flow ratios; it merely lengthens the maturity profile to 2031. Consequently, unless management can credibly demonstrate that the new capital will lift EBITDA by at least the same proportion as the debt increase, the rating agencies are likely to keep the rating unchanged in the near term but place the company on a “watch” list. A downgrade is not automatic, but a modest downgrade (e.g., one notch) is plausible if leverage creeps above the agency’s “investment‑grade” threshold or if the market perceives the funding as refinancing rather than growth‑driven.

Borrowing costs in the medium term – The price of the notes will be a direct barometer of the market’s view of that credit risk. Senior notes due 2031 for a mid‑tier French industrial player typically trade at a spread of 150‑250 bp over the 10‑yr Bund. A sentiment score of 30 (relatively bearish) and the lack of a US‑distribution clause suggest limited investor appetite, which could force FORV to price the issue at the higher end of that range. If the notes settle near the top of the spread, the effective cost of debt will rise compared with its existing portfolio, pressuring net‑interest margins. Moreover, any rating downgrade would widen the spread further, raising borrowing costs for future issuances and potentially prompting a repricing of existing debt.

Trading implications – Keep a close eye on the final pricing and the credit‑rating agency commentaries released over the next 4‑6 weeks. A tight pricing (spread < 150 bp) would signal that the market trusts the growth narrative and that the rating is likely to stay intact, making FORV’s equity a buy‑on‑dip if price falls on issuance news. Conversely, a wide spread (≥ 250 bp) or an agency “watch” designation would raise the probability of a rating downgrade, suggesting a short‑term sell or defensive positioning in the equity and a possible rotation into higher‑yielding, lower‑rated bonds. In the medium term, monitor leverage trends and EBITDA growth; sustained improvement can mitigate the rating pressure and stabilize borrowing costs.