S&P raises Life Time

S&P said it raised Life Time Inc.’s senior secured debt to B from B- and revised the recovery rating to 1 from 2. The agency also boosted the issue-level rating on its senior unsecured notes to CCC+ from CCC- and revised the recovery rating to 3 from 6. The improved issue-level ratings and revised recovery ratings indicate the better recovery prospects for the company's secured and unsecured lenders in default scenario.

Life Time recently completed its initial public office and used $570 million of proceeds to pay down $850 million term loan and add $100 million of cash to the balance sheet.

Concurrently, S&P affirmed Life Time’s CCC+ issuer rating and revised the outlook to stable from negative.

“The stable outlook reflects the reduced likelihood that we will downgrade Life Time over the next year because the material debt repayment using its IPO proceeds will probably support a reduction in its leverage next year despite our assumption of a moderating trend in its membership growth. In addition, we believe the company has adequate liquidity sources to fund its planned club development using the proceeds from its IPO, revolver borrowings and the proceeds from its sale-leaseback transactions,” S&P said in a press release.

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