S&P cuts Curo notes

S&P said it downgraded the rating on Curo Group Holdings Corp.’s senior secured notes to CCC+ from B-. The recovery rating is 5, indicating an expectation of modest recovery (10%-30%, rounded estimate: 25%) in default.

The downgrade follows Curo reporting its planned $225 million add-on to its senior secured notes to help fund the purchase of Heights Finance Corp., the agency noted.

“Debt to EBITDA was 6.6x as of Sept. 30, 2021, and we project it will rise further. We expect leverage to increase to and remain over 7x post-acquisition over the next 12 months. The acquisition of Heights added $225 million of senior secured notes and about $340 million of Heights revolver, and we expect future drawdowns on the Flexiti special-purpose entity (SPE) facility and securitization of Flexiti loans for funding new business to increase debt further,” S&P said in a press release.

Concurrently, the agency affirmed Curo’s B- rating.

The outlook is stable.

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