S&P assigns BBB- to Hilton loans

S&P said it assigned BBB- issue-level and 1 recovery ratings to the expected $1 billion term loan B-3 due 2028 and the proposed $1.6 billion term loan B-4 due 2030 issued by Hilton Worldwide Holdings Inc.'s borrower subsidiary Hilton Domestic Operating Co. Inc. The 1 recovery rating indicates very high (90%-100%; rounded estimate: 95%) recovery in default.

The company plans to use the proceeds to repay its outstanding $2.6 billion term loan due 2026, which is also rated BBB- with a 1 recovery rating.

“Although we view the term loan extension and repayment as a debt-for-debt refinancing, we extended our default year assumption by one year due to the passage of time. This results in a modest reduction in Hilton's assumed secured debt due to its regularly scheduled amortization payments in our recovery analysis. This modestly improves the residual value available to, and recovery prospects for, Hilton's unsecured lenders, though the reduction in its secured debt is not significant enough to warrant the revision of our unsecured recovery rating,” S&P said in a statement.

The outlook is stable.

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