S&P upgrades Hostess

Standard & Poor’s said it raised the corporate credit rating on Hostess Holdco LLC to B from B-.

The agency also said it raised the rating on the company’s $500 million first-lien term loan due April 2020 to B+ from B-.

S&P also said it revised the recovery rating to 2, indicating 70% to 90% expected default recovery, from 3.

The outlook is stable.

The revised issue-level and recovery ratings reflect a view that the company’s enterprise value at emergence from a potential bankruptcy has improved with Hostess’ improved profitability and cash-flow generation, S&P said.

The one-notch upgrade to the corporate credit rating reflects the successful execution of its re-launch of the snack cake business and substantially improved profitability, the agency said.

The company is now focused on growing its sales base through new products and continued expansion into channels where it historically has not maintained a significant presence, such as dollar stores and vending, S&P said.

Since the re-launch of the business in July 2013, the company has re-established its brands and regained good market share, the agency said.

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