Moody's rates Hanesbrands note B2

Moody's Investors Service said it assigned a B2 rating and a loss-given-default assessment of LGD5 (89%) to Hanesbrands Inc.'s proposed $500 million senior unsecured note issue and affirmed the company's Ba3 corporate family and probability-of-default ratings, SGL-1 speculative grade liquidity rating, B2 $500 million senior unsecured bridge loan (LGD5, 89%), Ba2 $2.15 billion first-lien facilities and B1 $450 million second-lien term loan.

The agency changed the loss-given-default assessments on the first-lien facilities to LGD3 (32%) from LGD3 (31%) and the loss-given-default assessments on the second-lien term loan to LGD5 (74%) from LGD5 (73%). The first-lien facilities include a $500 million five-year revolving credit facility, $250 million six-year term loan A and $1.4 billion seven-year term loan B.

The outlook is stable.

Proceeds from the new note issue will be used to repay in full the outstanding $500 million unsecured bridge loan.

The agency said Hanesbrands' Ba3 corporate family rating reflects the size and scale of its operations, its portfolio of well-recognized apparel brands with leading market shares in their categories and the staple nature of the products, which provides stable replenishment demand.

The ratings also reflect Moody's view that the product and segments in which the company operates are a relatively commoditized category with limited ability to achieve brand differentiation relative to peers. The categories in which the company operates are also highly competitive and the company faces competition across its product categories from a number of competitors in the apparel industry, private label competition and specialty apparel retailers.

The company's adjusted debt-to-EBITDA ratio is roughly 5x, which Moody's described as weak.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.