S&P: Tempur Sealy notes BB

S&P said it assigned a BB senior unsecured debt rating to Tempur Sealy International Inc.'s proposed $500 million senior unsecured notes due 2026.

The recovery rating is 3, indicating 50% to 70% expected default recovery.

The proceeds will be used to refinance the existing $375 million 6 7/8% senior unsecured notes due 2020.

The agency also said it will withdraw the ratings on these notes after they are repaid.

The proceeds will be used for general corporate purposes, which could include funding share repurchases, S&P said.

The rating on the company's existing $450 million 5 5/8% senior unsecured notes due 2023 remain at BB and the recovery rating remains at 3.

The company refinanced its senior secured credit facilities with a $1.1 billion facility, consisting of a $500 million revolver due 2021, $500 million term loan A due 2021 and $100 million delayed draw term loan due 2021.

For the 12 months that ended March 31, the company's debt-to-EBITDA ratio was about 3.6x, S&P said.

The ratings reflect the company’s strong market position in the North American mattress industry, portfolio of highly-recognized brands and geographic diversification, the agency said.

Other credit factors include the company's narrow business focus in a highly competitive industry, exposure to raw material cost volatility and vulnerability to reduced discretionary spending in an economic downturn, S&P said.

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