Fitch raises McGraw Hill unsecured notes

Fitch Ratings said it raised the ratings for McGraw-Hill Education, Inc.’s senior unsecured notes to B+/RR4 from B/RR5 and revised the outlook to positive from stable.

MHE boosted the potential recovery for the notes by repaying about $375 million since Platinum Equity’s leveraged buyout, the agency said.

The improved outlook mirrors MHE’s continuing adjusted EBITDA margin growth to 37% in FY2023 from 24% in FY2019 due to the successful integration of Achieve3000 and an outstanding digital transformation, the agency said.

Additionally, “Fitch expects leverage to continue on a declining trend over the short to medium term attributed to further operating improvements driven by the ongoing digital transformation and favorable momentum of the conversion cycle in the U.S.,” the agency said.

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