S&P ups Ontex, loans, notes to BB

Standard & Poor's said it raised its long-term corporate credit rating on Ontex Group NV to BB from BB-.

The outlook is stable.

At the same time, the agency raised the issue rating on Ontex's €100 million revolving credit facility, €250 million senior secured notes and €380 million term loan A to BB from BB-. The recovery rating was revised to 3 from 4, reflecting an expectation of average (50%-70%) recovery in the event of a payment default, albeit at the low end of the range.

In addition, S&P raised the long-term corporate credit rating on Ontex IV SA to BB from BB- and withdrew the rating as the entity is no longer a relevant debt issuer following last year's IPO.

S&P said the upgrade reflects an improvement in Ontex's earnings and cash flow over the past few quarters, and its view that increased sales and marketing spend, as well as numerous cost-saving initiatives, should enable further earnings growth in 2015 and 2016.

Under its base case, the agency forecasts continued improvements in Ontex's credit measures, alongside material positive free operating cash flow generation, despite relatively high volumes of growth-oriented capital expenditures.

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