S&P boosts Missouri TopCo

S&P said it boosted the issuer rating for Missouri TopCo Ltd., parent of Matalan, to CCC+ from CCC-. The agency also upgraded the rating on the higher ranking senior secured debt to B from CCC+ with a recovery rating of 1 (95%) and the lower-ranking senior secured debt to CCC+ from CCC-, with a recovery rating of 3 (50%).

“Despite a slow start to FY2022, we expect Matalan's topline to rebound during the year and that FY2023 will see further upside. We forecast that revenue will grow by 33%-38% in FY2022, reaching its pre-pandemic level. Stores in the U.K. reopened on April 12, 2021, and Matalan has reported consistently strong online operations. When it has been able to trade, the group has demonstrated a relatively positive performance, based on demand for Matalan's value-oriented offering across diverse clothing and home segments and its out-of-town locations. This trend could extend into FY2023,” S&P said in a press release.

However, much of Matalan's financial debt will become current in the next 12-18 months, increasing refinancing risk, the agency warned.

The outlook is negative.

S&P ups Serta Simmons

S&P said it upgraded Serta Simmons Bedding, LLC’s issuer rating to CCC from CCC-.

“The upgrade reflects the possibility of additional debt restructurings, but they may not be imminent. We had previously expected the company to announce a debt restructuring transaction within six months of the announcement of the first-lien debt repurchase transaction, which began on April 5, 2021. At that time, the company announced that it was considering additional opportunistic debt repurchases at a discount. We continue to believe the company will seek restructuring options to alleviate its onerous capital structure within 12 months, though this timing is uncertain,” S&P said in a press release.

Concurrently, the agency lowered the rating to B from B+ on the $200 million first-out super-priority term loan due 2023. The recovery rating remains 1+, indicating an expectation for full recovery (greater than 100%) in default.

S&P also cut the rating on the $851 million second-out super-priority debt due in 2023 to B- from B. The recovery rating remains 1, indicating an expectation for very high recovery (90%-100%; rounded estimate: 95%). The agency trimmed the rating on the $882 million outstanding first-lien term loan due 2023 to CC from CCC-. The recovery rating remains 6, indicating an expectation for negligible recovery (0%-10%; rounded estimate: 5%).

The agency said it removed all ratings from CreditWatch with negative implications, where they were placed on April 5, following the company's announced tender offer.

The outlook is negative.

S&P lifts Victoria’s Secret notes

S&P said it raised its issue-level rating on Victoria’s Secret & Co.'s planned senior unsecured notes to BB- from B+ and revised the recovery rating to 4 from 5. The 4 recovery rating indicates an expectation for average (30%-50%; rounded estimate: 30%) recovery in default.

“We raised our rating on the proposed debt following VS' announcement that it will issue a $400 million first-lien term loan B and $600 million of senior unsecured notes. Previously, we assumed it would issue a $500 million term loan and $500 million of senior unsecured notes. Because of the change in the structure of the issuance and the reduction in the amount of senior secured borrowing, there is additional value available for the unsecured lenders, which improves their anticipated recovery in a simulated default scenario,” S&P said in a press release.

The agency also affirmed the BB+ issue-level rating on the company's senior secured term loan. The loan’s 1 recovery rating is unchanged and indicates an expectation for very high (90%-100%; rounded estimate: 95%) recovery in default.

The BB- issuer credit rating and stable outlook on VS are unchanged.

S&P puts Cedar Fair on positive watch

S&P said it placed all its Cedar Fair LP ratings, including the CCC senior unsecured notes ratings, on CreditWatch with positive implications.

“The CreditWatch reflects the likelihood we will raise ratings by one notch if we believe Cedar Fair can materially reduce leverage starting in 2021 if recent pent-up demand trends for out-of-home entertainment continue, including for Cedar Fair's theme parks,” S&P said in a press release.

S&P said it plans to resolve the CreditWatch over the next few months, with the outcome likely largely dependent on the pace of attendance recovery.

S&P puts Six Flags on watch

S&P said it placed all its ratings for Six Flags Entertainment Corp. on CreditWatch with positive implications.

“The CreditWatch reflects the likelihood we will raise ratings if we believe Six Flags can materially reduce leverage starting in 2021 if recent pent-up demand trends for out-of-home entertainment continue, including for Six Flag's theme parks,” S&P said in a press release.

S&P said it aims to resolve the CreditWatch over the next few months, with the outcome likely largely dependent on the pace of attendance recovery.

Fitch slashes Obrascon Huarte

Fitch Ratings said it downgraded Obrascon Huarte Lain SA's long-term issuer default rating to RD from C.

The downgrade reflects the completion of OHL's debt restructuring on Monday, which Fitch said it considers a distressed debt exchange.

The company completed its capital increase and exchanged around €593 million of senior notes into new around €487 million of senior secured notes.

“Fitch plans to re-assess OHL's restructured profile and assign a rating consistent with our forward-looking assessment of the company's credit profile once we have clarity on current and expected trading,” the agency said in a press release.

S&P changes iQera view to negative

S&P said it revised its outlook on iQera to negative from stable and affirmed the B+ long-term ratings on the company and its senior secured notes.

“We could lower our ratings in the next 12 months if iQera aggressively invests in large portfolios beyond our expectations, thereby bringing liquidity management down to industry norms. In the longer term, we could downgrade the company if it is side-lined in the French distressed-debt market because of stronger competition,” S&P said in a press release.

The agency noted competition in the French distressed-debt market is getting tougher and iQera suffered a ransomware attack on May 10.

Moody’s turns American Axle view to positive

Moody’s said it revised American Axle & Manufacturing Inc.’s outlook to positive from negative.

“The positive outlook reflects Moody's expectation that the recovery of automotive vehicle volumes will continue in North America through 2022, supporting improvement in operating results. The positive outlook also anticipates that solid free cash flow generation will be largely utilized for debt repayment, with the possibility of smaller tuck-in acquisitions to supplement increased penetration of electric driveline markets,” Moody’s said in a press release.

The agency also affirmed American Axle’s B1 corporate family rating, B1-PD probability of default rating, Ba2 senior secured rating and B2 senior unsecured rating.

Moody's shifts Fedrigoni view to stable

Moody's Investors Service said it changed Fedrigoni’s outlook to stable from negative.

“The stable outlook reflects Moody's expectation that the positive trend seen in Q1 2021 will continue during 2021 leading to a further strengthening of Fedrigoni's credit quality. Moody's expects that the ongoing improvement in global economic sentiment and the acceleration of vaccination campaign in various jurisdictions where Fedrigoni operates will, despite increasing raw material prices, lead to higher demand for its products and higher profitability supporting a deleveraging below 6x Moody's adjusted debt/EBITDA in the next 12-18 months,” Moody’s said in a press release.

Concurrently, the agency affirmed the B2 corporate family rating, the probability of default rating at B2-PD, the B2 rating on the company's €580 million of guaranteed senior secured floating-rate notes and the B2 rating on the €225 million of guaranteed senior secured floating-rate notes.

Moody's alters Performance Food view to stable

Moody's Investors Service said it changed Performance Food Group, Inc.'s outlook to stable from negative. Concurrently, Moody's affirmed the company's Ba3 corporate family rating, Ba3-PD probability of default rating, B2 senior unsecured notes rating and upgraded the company's speculative grade liquidity rating to SGL-1 from SGL-2.

“The outlook change to stable from negative reflects Moody's expectations for a continued recovery in the food service sector following the lifting of coronavirus-related dining restrictions across the majority of U.S. jurisdictions. Moody's projects PFG's earnings reaching pre-pandemic levels over the next 12 months on a pro-forma basis for the acquisition of Core-Mark Holding Company (Core-Mark), which combined with debt repayment will support significant deleveraging despite the incremental acquisition debt,” the agency said in a press release.

Moody's said it forecast that debt/EBITDA declining to under 4x in FY 2022, from an estimated 5.1x pro-forma for the Core-Mark acquisition (Moody's-adjusted leverage based on PFG's fiscal year 2021 guidance, Core-Mark's LTM March 31, results and expected financing).

The speculative grade liquidity rating upgrade reflects expectation for solid positive free cash flow over the next 12-18 months, good availability under the sizeable asset-based revolver, lack of near-term maturities and a covenant-lite capital structure, the agency said.

Moody's eyes PrimeSource for downgrade

Moody's Investors Service said it placed Park River Holdings, Inc.'s, operating as PrimeSource Building Products, Inc., ratings on review for downgrade including the B1 rating on the company's senior secured term loan and the Caa1 ratings on the senior unsecured notes.

The review follows an announcement that PrimeSource agreed to acquire Wolf Home Products from affiliates of Tenex Capital Management. The deal terms are not publicly available currently.

“The proposed transaction is a credit negative, despite potential revenue and synergy benefits, since PrimeSource's leverage could increase shortly after the company's debt-financed acquisition of Nationwide Enterprises, Inc. (Nationwide). PrimeSource completed the purchase of Nationwide less than four weeks ago,” Moody’s said in a press release.

The review will focus on PrimeSource's new capital structure, deleveraging strategy and liquidity after the Wolf acquisition. “Moody's believes that leverage will exceed 6.5x, to which Moody's previously projected leverage would approach at year-end 2022 and the previously identified downward rating trigger,” the agency said.

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