Recently, NP3 received a negative outlook on its BB/stable rating from NCR. The ICR will need to be kept above 2.2x for the outlook to not materialize into a downgrade. Overall, we argue that NP3’s high yielding assets provides the company with a strong enough cash flow to deal with the rising interest rates, albeit the ICR is likely to drop down towards 2.0x. The downside to this scenario relates to increasing vacancies. We reiterate our MP recommendation.
