F1: Leftover Ecclestone F1 debt labelled ‘junk’

Billions of dollars worth of loans owed by Formula One have been rated “junk” over fears that Beijing’s zero-Covid policy threatens to derail the sport’s return to China.

Analysts at one of world’s three main debt rating agencies say a failure to return to China next year risks scuppering F1’s ability to pay down $2.9bn (£2.5bn) in loans, debt that is a legacy of motor racing mogul Bernie Ecclestone’s sale of the franchise six years ago.

Two tranches of debt issued by a Luxembourg entity on behalf of F1 were given ratings of BB and BB+ by Fitch. Both are below the BBB rating that is the minimum required for “investment grade” status. Debt with a rating below this threshold is typically termed “junk” by investors, indicating it is high risk.

F1 announced in September that the motor racing championship would return to China next year after a three-year hiatus. A race is scheduled in Shanghai in April next year under a two-year deal with Chinese authorities.

The Chinese comeback is billed as one of highlights of the 2023 F1 calendar, alongside the sport’s debut in Las Vegas.

However, Fitch said the showpiece event in China could be threatened by Beijing’s continued use of lockdowns to curb Covid-19 outbreaks.

“With cases of the virus still widespread globally, China’s zero tolerance approach to Covid-19 could put this race in doubt,” analysts from Fitch said. The Telegraph