S&P upgrades Hot Topic

S&P said it raised the issuer credit rating on HT Intermediate Holdings Corp. (Hot Topic) to CCC+ from CCC.

The agency also said it upgraded the rating on the senior notes to B from B-.

The upgrades are due to the company's success in stabilizing its operating results and reducing its outstanding debt, S&P said.

The agency said it now expects EBITDA to increase modestly over the next year, driven by better inventory management and product selection as the company continues to build out its merchandising team.

In addition, Hot Topic repaid $90 million of its senior notes, bringing the outstanding balance down to $250 million and reducing interest expense by about $8 million on an annualized basis, S&P explained.

The negative outlook reflects a view that, despite the forecast for modest improvement in operating performance over the next 12 months, long-term sustainability of the business will remain challenged because of a difficult competitive environment and a less supportive macroeconomic backdrop, the agency said.

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