S&P changes Office Depot to stable

S&P said it revised its outlook on Office Depot Inc. to stable from negative.

At the same time, the agency affirmed the B issuer credit rating on the company.

The agency also affirmed the B+ issue-level rating on Office Depot's senior secured term loan due in 2022. The 2 recovery rating is unchanged and indicates an expectation for substantial (70%-90%; rounded estimate: 80%) recovery in the event of a payment default.

S&P does not rate the company's $1.2 billion asset-based lending revolver facility due in 2021.

“The outlook revision reflects a view that the company has made decent and sustainable progress toward stabilizing revenues at its B2B segments and our expectation for its strategic initiatives to continue to gain traction and mitigate any meaningful erosion in margins,” the agency said in a news release.

“In the past few quarters, the company modestly diversified its operations in favor of the stickier and relatively higher margin B2B segments (which currently represent about 60% of total sales), driven by its acquisition of CompuCom in late-2017.”

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