S&P ups HGIM loan to CCC+

S&P said it upgraded HGIM Corp.’s term loan to CCC+ from D and revised the recovery rating to 3 from 2, indicating an expectation for meaningful (50%-70%; rounded estimate: 65%) recovery in default. Concurrently, the agency affirmed HGIM’s CCC+ issuer rating.

“We raised our issue-level rating on HGIM's term loan to CCC+ from D because we do not expect additional below par debt tenders in the near-term, although we believe its upcoming maturity in August 2023 poses significant refinancing risk,” S&P said in a press release. The agency cut the loan’s rating to D after a series of below-par tenders last year.

“Given that it completed these tenders at a 45%-50% discount to par, we considered them to be distressed and tantamount to default, which led us to lower our issue-level rating to D (where it remained given our expectation for additional below-par tenders),” the agency said. As of Sept. 30, HGIM had about $322 million in principal outstanding on the term loan.

The outlook is negative.

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