S&P assigns B to Sedgwick Claims loan

S&P said it assigned B debt and 3 recovery ratings to Sedgwick LP subsidiaries Sedgwick Claims Management Services Inc.’s and Lightning Cayman Merger Sub Ltd.'s planned $3.5 billion first-lien term loan due 2028. The 3 recovery rating, indicates our meaningful (50%-70%; rounded estimate: 65%) recovery in default.

The B rating is consistent with the agency’s ratings on Sedgwick’s outstanding loans.

The proceeds will be used to repay first-lien term loan tranches, including a $2.2 billion first-lien term loan B due 2025, a $1.1 billion first-lien term loan B-2 due 2026, and a $143 million first-lien term loan B-3 due 2026, with remaining funds added to the balance sheet.

“We expect this transaction to be leverage neutral as debt levels will remain relatively unchanged from December 2022 levels. Debt servicing costs will likely increase modestly, as expected pricing on the new tranche will likely be incrementally higher than the blended rates on the existing senior secured term loans,” S&P said in a press release.

The outlook is positive.

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