S&P upgrades HUB loans to B+

S&P said it raised its issue rating on HUB International Ltd.'s senior secured facilities (comprising of a $1.95 billion term loan due October 2020, a $225 million revolver due October 2018 and a C$50 million revolver due October 2018) to B+ from B and revised the recovery rating to 2 from 3.

The 2 recovery rating indicates the agency’s belief that lenders could expect substantial (70% to 90%) recovery in the event of a payment default. Recovery expectations are in the lower half of the 70% to 90% range.

S&P revised the recovery rating following a reassessment of its estimated emergence valuation in light of the strong EBITDA growth characteristics the company has exhibited since the inception of the loans.

More specifically, the agency expects EBITDA (per calculations) to exceed $600 million by year-end 2017 compared with less than $400 as of year-end 2013. S&P said it expects this to be achieved through a combination of robust (acquisition supported) revenue growth and stable margins.

The CCC+ senior unsecured debt rating and 6 recovery ratings remain unchanged.

The company’s B long-term corporate credit rating remains unchanged, supported by its fair business risk profile and highly leveraged financial risk profile.

The outlook is stable.

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