S&P lifts Choice Hotels, rates loan BB+

Standard & Poor’s said it raised the rating on Choice Hotels International Inc.’s senior unsecured debt issues to BB+ from BB and revised the recovery rating on the debt issues to 3 from 5.

The 3 recovery rating indicates 50% to 70% expected default recovery.

S&P also said it assigned a BB+ rating to the company’s new $450 million senior unsecured revolving credit facility due 2020 with a 3 recovery rating, which in line with the current ratings on the company’s unsecured debt.

The favorable revision of the unsecured debt recovery rating reflects the company’s refinancing of its senior secured credit facility, the agency said.

Given that the previous secured credit facility had a priority claim on the company’s assets, the refinancing of the facility removed the security pledge of the company’s assets and results in a higher emergence value available and higher recovery prospects for unsecured lenders in the event of a default, S&P said.

The corporate credit rating on Choice remains at BB+.

The outlook is stable.

The ratings reflect Choice’s strong business risk profile and aggressive financial risk profile, the agency said.

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