S&P shifts Quad/Graphics view to positive

S&P said it revised Quad/Graphics Inc.’s outlook to positive from stable.

“Cost-management initiatives, asset sales and debt repayment have helped the company lower its leverage. Quad lowered its S&P Global Ratings' adjusted leverage by almost 1.1x from 4.9x as of March 2020 to about 3.8x as of June 2021. The de-leveraging was driven by a combination of debt paydowns and improving operating performance in the first half of 2021 especially compared to a weak 2020 due to the Covid-19-related economic slowdown,” the agency said.

“The outlook revision reflects that we could raise our ratings on Quad to B+ once we are more certain the company will be able to consistently maintain leverage below 4x, free operating cash flow (FOCF) to debt greater than 10%, repay or refinance its senior unsecured notes maturing in May 2022, and maintain a more than 15% cushion on its leverage covenant,” S&P said.

Concurrently, the agency affirmed the issuer’s B rating, the B issue and 3 recovery ratings on its secured loans and the CCC+ issue and 6 recovery ratings on Quad’s unsecured notes.

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