S&P cuts KAR Auction

S&P said it lowered its issue-level rating on KAR Auction Services Inc.'s revolving credit facility due 2021, term loan B-2 due 2021 and term loan B-3 due 2023 to BB- from BB and revised its recovery rating on the facilities to 3 from 2.

The 3 recovery rating indicates an expectation for meaningful (50%-70%; rounded estimate: 65%) recovery in the event of a payment default.

S&P lowered its issue-level rating on KAR's secured debt to reflect that the company will reduce the amount outstanding under its B-3 term loan by less than what S&P had previously expected. The company also intends to reprice the remainder of its existing term loans and increase its revolving credit facility's commitment to $350 million.

“We now expect that the company will issue $950 million, instead of $800 million, of senior unsecured notes due 2025. However, our ratings on the unsecured notes remain unchanged,” S&P said in a news release.

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