S&P cuts Mister Car Wash, loan to B-

S&P said it lowered its corporate credit rating on Mister Car Wash Holdings Inc. to B- from B.

The outlook is stable.

The agency also downgraded its issue-level ratings on the company's senior secured credit facility to B- from B. The recovery rating remains unchanged at 3, indicating lenders could expect meaningful recovery in the event of a payment default, at the low end of the 50% to 70% range.

"We based the downgrade of Mister Car Wash on deteriorating credit metrics, such that leverage will meaningfully increase to the mid-8x area for 2016 from our previous expectations in the low- to mid-6x area," S&P credit analyst Adam Melvin said in a news release.

"We also based the rating action on lower free operating cash flow because of higher interest expense, which the company has used in the past to fund acquisitions. Still, despite the higher interest expense, we expect the company to generate healthy free cash flow levels."

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