S&P changes KKR Retail to stable

S&P said it revised its outlook on KKR Retail Partners Midco Sarl, the majority owner of Groupe SMCP, to stable from negative, and affirmed its B long-term corporate credit rating.

The agency also affirmed its B issue rating on KKR Retail’s €290 million senior secured notes. The recovery rating on this debt is unchanged at 4, indicating an expectation of average recovery in the event of a payment default, in the higher half of the 30%-50%.

S&P said the outlook revision reflects its expectation that KKR Retail’s operating performance will continue to improve and that the company will maintain positive like-for-like sales growth after a solid result for the full year of trading to Dec. 31, 2015, posting record sales growth of 33% and EBITDA growth of greater than 35%.

Importantly, SMCP's performance over the past 12 months has enabled the company to meaningfully improve its FOCF, which returned to positive in 2015, highlighted by a ratio of FOCF to debt of about 10%, the agency said. SMCP has been able to achieve continued momentum into the first quarter of 2016.

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