S&P rates K&N Parent loans B+, CCC+

S&P said it assigned its B corporate credit rating to K&N Parent Inc.

The outlook is stable.

At the same time, the agency assigned its B+ issue-level rating and 2 recovery rating to the company's proposed $40 million revolver and $235 million first-lien term loan. The 2 recovery rating indicates an expectation for substantial (70%-90%; lower half of the range) recovery in the event of a payment default.

Additionally, S&P assigned its CCC+ issue-level rating and 6 recovery rating to the company's proposed $110 million second-lien term loan. The 6 recovery rating indicates an expectation for negligible (0%-10%) recovery in the event of a payment default.

"Our rating on K&N reflects its high leverage (with a debt-to-EBITDA metric of over 6.5x) and the narrow scope and scale of its operations," S&P credit analyst David Binns said in a news release.

"In addition, the company's products are discretionary in nature and it faces weaker revenue growth prospects than the broader auto supplier market."

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