S&P lifts ServiceMaster, loans, notes

Standard & Poor's said it raised its corporate credit rating on ServiceMaster Co. LLC to BB- from B+.

The outlook is stable.

At the same time, the agency raised its issue-level rating on the company's first-lien credit facilities to BB from BB-. The recovery rating on this debt remains 2, with the recovery expectations now falling at the upper half of the 70%-90% range in the event of a payment default.

S&P also upgraded its issue-level ratings on the company's unsecured notes to BB- from B+. The recovery rating remains 4, with the recovery expectation improving to the upper half of the 30%-50% range.

The company no longer reports financial statements under ServiceMaster Co. LLC subsequent to the refinancing of its notes in the third quarter of 2015. It now reports under ServiceMaster Global Holdings, Inc., and S&P will be transferring its ratings accordingly.

The company has about $2.7 billion of debt outstanding.

S&P said the upgrade reflects its expectation that the company will continue to improve its credit metrics, which have steadily strengthened since its initial public offering in 2014, reflecting stronger-than-anticipated organic sales growth at American Home Shield and increased sales at Terminix, thanks to new services and price increases.

The agency expects these trends to continue, resulting in financial leverage in the mid-4 times area in fiscal 2016 and continued improvement in 2017 and beyond, given the company's target debt-to-EBITDA ratio of 2.5 times to 3 times (excluding debt adjustments).

© 2015 Prospect News.
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