S&P rates Darling Ingredients notes BB+

S&P said it assigned a BB+ rating and 4 recovery rating to Darling Ingredients Inc.'s proposed $500 million senior unsecured notes due 2027.

The 4 recovery rating indicates 30% to 50% expected default recovery.

Darling is a global independent leader in a fragmented industry, but the company's plants are entrenched and it has in key locations, S&P said.

Its fuel ingredients segment and Diamond Green Diesel joint venture continue to see increased sales, even as its other segments have faced some softness due to low commodity costs.

Darling continues to reinvest the cash flow generated by its joint venture in additional production capacity to meet the increasing global demand for biofuel, S&P said.

Despite reinvesting heavily in its biodiesel venture, the company also has continued to reduce its leverage in line with expectations, the agency said.

S&P said it expects that Darling's debt-to-EBITDA ratio will likely approach 3x over the next several quarters as it prudently balances modest share repurchases under its current $200 million authorization with ongoing debt repayment.

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