S&P gives Ingles Markets notes BB

S&P said it gave Ingles Markets Inc.’s planned $350 million of 10-year senior unsecured notes BB issue and 3 recovery ratings. The 3 recovery rating reflects an expectation for meaningful (50%-70%; rounded estimate: 65%) recovery in bankruptcy.

Ingles will use the proceeds to refinance its $295 million in unsecured notes and borrowings under its revolver. Also, the refinancing will include a $150 million unsecured revolver maturing in five years, replacing the current $175 million revolver due next year.

Concurrently, S&P affirmed Ingles’ BB issuer rating and changed the outlook to positive from stable.

“The outlook revision reflects, in part, improved operating performance expectations and better credit protection measures. Ingles has shown good performance trends in fiscal 2021. These include comparable-store sales growth approaching 7% and adjusted EBITDA margins in the high 8% area, both somewhat ahead of our previous expectations,” S&P said in a press release.

The agency noted there is a possibility of an upgrade within the next 12 months if Ingles Markets demonstrates consistent performance along with adjusted leverage remaining below 2x.

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