S&P rates Choice Hotels notes BBB-

S&P said it assigned a BBB- issue-level rating to Choice Hotels International Inc.’s proposed senior unsecured notes.

Choice plans to use the proceeds to repurchase a portion of its 5.75% senior notes due in 2022, repay in full the $250 million 364-day term loan due in 2021 and fund working capital or general corporate uses if any proceeds remain.

“We view the transaction as approximately leverage-neutral because proceeds will be mostly used to repay debt. The transaction also extends maturities at a potentially favorable interest rate. In our base-case forecast, Choice’s adjusted debt to EBITDA will be in the 3x-4x area in 2020 and leverage could reduce in 2021, assuming a recovery and no acquisitions and dividends,” S&P said in a press release.

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