S&P boosts Coty

S&P said it raised its ratings on Coty Inc. and its senior unsecured debt to BB from BB-, and its secured debt to BB+ from BB. The recovery ratings are unchanged at 2 for the secured debt and 3 for the unsecured debt, respectively.

“The rating action reflects Coty's improved credit metrics from EBITDA growth as well as permanent debt reduction, and our expectation for leverage to further improve to below 4x by the end of fiscal 2024.

“Coty continues to prioritize debt reduction, repaying close to $200 million of debt in the last 12 months leading to leverage improving to 4.7x at the end of fiscal 2023 from 5.4x at the end of fiscal 2022. The company recently announced a global offering of 33 million shares both on the New York Stock Exchange and Euronext Paris. We expect it to use the net proceeds to reduce debt. Coty recently completed the $2 billion revolver extension, pushing the maturity to 2028. The company also issued new seven-year U.S. dollar senior secured notes and five-year euro senior secured notes, and fully paid off its term loan B due in 2025,” the agency said in a press release.

S&P said it expects Coty to drive down its adjusted leverage below 4x by the end of fiscal 2024.

The outlook is positive.

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