S&P lifts Hilton notes to BB

Standard & Poor’s said it raised the rating on Hilton Worldwide Finance Corp.’s $1.5 billion senior unsecured notes due 2021 two notches to BB from B+.

The agency also said it revised the recovery rating on these notes to 4 from 6. The 4 recovery rating reflects an expectation of 30% to 50% expected default recovery.

The rating on the notes is the same as the corporate credit rating on parent company, Hilton Worldwide Holdings Inc.

The upgrade reflects Hilton’s recent repayments of its senior secured term loan in the second quarter with proceeds from the sale of the Hilton Sydney, resulting in improved recovery prospects for the senior unsecured notes because of a meaningful reduction in priority debt ahead of the notes, S&P said.

All other ratings on Hilton, including its BB corporate credit rating, are unchanged.

The outlook remains positive even though Hilton is currently evaluating potential divestitures of its timeshare and hotel real estate businesses, the agency said. The potential changes in the company’s capital structure in a divestiture scenario are unknown at this time, S&P said.

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