S&P rates L Brands notes B+

S&P said it assigned its B+ issue-level rating and 4 recovery rating to L Brands Inc.’s proposed $750 million of senior unsecured guaranteed notes maturing in 2030. The 4 recovery rating indicates expectations for average (30%-50%; rounded estimate: 30%) recovery in the event of a default.

“Our existing issue-level ratings on the company’s senior secured and senior unsecured notes without guarantees are unaffected by the transaction,” the agency said in a press release.

L Brands will use the proceeds for a tender on its 2022, 2023, 2033 and 2037 notes. The company will also use cash on the balance sheet to repay the $450 million of notes maturing in 2021.

“Our B+ issuer credit rating and stable outlook on L Brands remain unchanged and continue to reflect our expectation that declining sales at Victoria’s Secret will offset modest sales growth at Bath and Body Works, which – combined with our current expectation the company will be profitable – indicates its leverage will be in the mid-4x range in 2020 and below 4x in 2021,” S&P said.

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