S&P assigns BB- to ServiceMaster notes

S&P said it assigned its BB- issue-level rating to the ServiceMaster Co. LLC's proposed $1 billion senior unsecured notes due 2024. The recovery rating is 4, indicating an expectation of average (30%-50%, on the upper end of the range) recovery in the event of a payment default.

The company, a wholly owned subsidiary of the ServiceMaster Global Holdings Inc., intends to use the net proceeds from this issuance and the previously announced $1.5 billion of first-lien term loan due in 2023 primarily to refinance its $2.4 billion term loan B due 2021.

All of the other ratings on the company, including S&P’s BB- corporate credit rating, are unchanged.

The outlook remains negative.

The proposed transactions will increase ServiceMaster's adjusted debt to EBITDA ratio to 4.9x from 4.6x. S&P said it expects the company will maintain debt leverage below 5x over the next 12 to 24 months from steady profit growth in its American Home Shield segment and Terminix/pest control businesses.

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