S&P ups Houghton Mifflin Harcourt

S&P said it raised Houghton Mifflin Harcourt Co.’s issuer rating to B from B- and its secured debt to B+ from B. The secured debt’s 2 recovery rating, indicating an expectation of 70%-90% (rounded estimate: 85%) recovery in bankruptcy.

“The upgrade reflects better-than-expected operating results, and our expectation that earnings and cash flows will improve further over the next 12 to 24 months. HMH's third quarter was materially stronger than we anticipated. Strong growth (46%) in the company's extension business and particularly high demand for its Heinemann products as students returned to in-person learning drove net sales growth of roughly 26%,” S&P said in a press release.

The agency said it forecasts HMH’s leverage improving to around 3x in 2022.

The outlook is positive.

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