S&P affirms Del Monte Foods

S&P said it affirmed its B- corporate credit rating on Del Monte Foods Inc. The outlook is negative.

At the same time, S&P affirmed its issue-level ratings on the company's first- and second-lien senior secured term loans. The first lien is rated B- with a 3 recovery rating, indicating an expectation for meaningful recovery (50%-70%, lower half of the range) in the event of a payment default.

The second lien is rated CCC with a 6 recovery rating, indicating an expectation for negligible recovery (0%-10%) in the event of a payment default.

“The affirmation reflects our view that performance will improve and the company will improve EBITDA to above $177 million (lease adjusted) and pay down its asset-backed lending (ABL) borrowings in fiscal 2017; otherwise, we will lower the rating,” said S&P analyst Amanda Cusumano in a news release.

“We are not lowering the rating at this time because the company has sufficient liquidity, with over $200 million of ABL availability at the fiscal year-end, and we do not believe the company's capital structure is unsustainable.”

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