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S&P upgrades KAR Auction
Standard & Poor’s said it raised the corporate credit rating on KAR Auction Services Inc. to BB- from B+.
The agency also said it raised the rating on KAR’s senior secured term debt to BB from BB-. The 2 recovery rating indicates 70% to 90% expected default recovery.
The outlook is stable.
KAR continues to show high levels of profitability and steady cash flow generation, S&P said.
Since a group of private equity sponsors sold their ownership stake in the company in late 2013, the agency said it believes KAR’s management depth is sufficient to execute its business strategy and its financial policy will balance the requirements of shareholders and creditors.
KAR has an established position in the competitive whole-car and salvage auction markets, is somewhat resilient to economic weakness and has strong EBITDA margins, S&P added.
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