S&P rates Asbury Auto notes BB

S&P said it assigned a BB rating and a recovery rating of 5 to Asbury Automotive Group Inc.’s proposed $1.125 billion of senior unsecured notes to be issued in two tranches due in 2028 and 2030, the same as its existing senior subordinated notes. “We expect to withdraw ratings on the existing $600 million notes due 2024 upon close of this transaction,” S&P said in a press release.

The agency affirmed Asbury’s BB+ rating and removed all its ratings from CreditWatch with negative implications where they were placed on Dec. 12.

“The rating affirmation reflects our expectation that Asbury’s pro forma leverage of about 4.3x at the end of 2020 will only temporarily be above our downgrade trigger of 4x and will fall marginally below that in about 24 months because of EBITDA growth and the company’s commitment to debt reduction. Asbury has historically operated with leverage of 3x-3.5x and will suspend share repurchases to focus on acquisition integration, synergy realization, and debt reduction,” S&P said.

The outlook is negative.

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