S&P lowers L Brands revolver

S&P said it reviewed the recovery and issue-level ratings for L Brands Inc. that were considered under criteria observation (UCO) after the agency published a revised recovery ratings criteria Dec. 7.

With the criteria review complete, S&P said it removed the UCO designation from these ratings and lowered the rating on the company’s senior secured revolving credit facility to BBB- from BBB because the issue is now capped on most speculative-grade issuers at BBB-, regardless of the recovery rating.

This change de-emphasizes the weight recovery plays in the up-notching issue ratings for issuers near the investment-grade threshold, since recovery is a smaller component of credit risk when default risk is more remote and because recovery prospects may be less predictable and more variable for these issuers, S&P explained.

Importantly, this revision does not reflect a change in the assessment of the company's default risk, which is indicated by the corporate credit rating, the agency said.

The recovery rating on L Brands' secured debt remains at 1, indicating 90% to 100% expected default recovery.

The rating on L Brands' unsecured debt with subsidiary guarantees remains at BB+ with a 3 recovery rating, indicating 50% to 70% expected default recovery.

The issue-level rating on the company's unsecured debt without subsidiary guarantees remains at BB+ with a 6 recovery rating, indicating 0 to 10% expected default recovery.

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