S&P rates Laureate, loan B+

S&P said it gave B+ ratings to Laureate Education Inc. and its planned $500 million senior secured term loan. The loan’s 3 recovery rating indicates meaningful (50%-70%; rounded estimate: 55%) recovery in default.

“The B+ issuer credit rating reflects Laureate's limited geographic diversity, small size, operations in relatively volatile developing markets that make it susceptible to currency fluctuations and cash flow generation, and geopolitical risk. Partially offsetting these factors are the company's profitability, which we believe is good compared to that of rated peers; its operations in both traditional universities and lower-cost education; and the good growth trajectory of higher education participation rates in the markets where it operates,” the agency said in a press release.

S&P said it forecasts margin expansion to the 30% area in 2022 and 2023, from about 21% at the end of 2021, and S&P Global Ratings' lease-adjusted debt to EBITDA in the mid- to low-3x area in 2022 and high-2x area in 2023.

The outlook is stable.

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