S&P rates Sally notes BB+

Standard & Poor's said it assigned a BB+ rating to Sally Holdings LLC and Sally Capital Inc.'s $200 million senior notes due 2023 with a recovery rating of 3, indicating 50% to 70% expected default recovery.

The BB+ rating is the same as the BB+ corporate credit rating on Sally Beauty Holdings Inc., the parent company.

The company will issue the notes under its shelf registration.

According to the company, it plans to use net proceeds for general corporate purposes and to repay the amount outstanding under its senior credit facility, the agency said.

S&P said it forecasts that with the proposed issuance, Sally's debt leverage will increase slightly to about 3.5x at fiscal-year end 2013, which remains in line with expectations.

The ratings reflect the company's satisfactory business risk profile, given its leading position in the growing, yet highly discretionary and fragmented beauty supply industry, stable historical operating performance and highly concentrated supplier base, the agency said.

Sally competes with a wide range of participants in the beauty-products sector, including other specialty beauty supply stores, salons, mass merchants, drug stores and supermarkets, S&P said.

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