S&P assigns BBB- to Yum! Brands loans

S&P said it assigned its BBB- issue-level and 1 recovery ratings to Yum! Brands Inc.’s operating subsidiaries' proposed senior secured credit facilities.

The facilities issued by KFC Holding Co., Pizza Hut Holdings LLC and Taco Bell of America LLC consist of a $1.25 billion revolver, a $750 million term loan A and a $1.5 billion term loan B.

The 1 recovery rating indicates an expectation for very high recovery (90%-100%; rounded estimate: 95%) in the event of default.

The company will use the net proceeds and cash on hand to refinance its current senior secured credit facilities.

“We view the transaction as leverage-neutral and forecast S&P Global Ratings-adjusted leverage in the low-5x area in fiscal 2021 from 5.4x as of Dec. 31, 2020,” S&P said in a news release.

The ratings on Yum!'s senior unsecured notes and its subsidiaries' senior unsecured notes are unchanged.

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