S&P gives CVS B; debt B, CCC+

S&P said it assigned its B long-term corporate credit rating to CVS Holdings I LP.

The outlook is stable.

At the same time, the agency assigned a B issue-level rating to the company's proposed first-lien debt. The 3 recovery rating reflects an expectation of meaningful (50%-70%; rounded estimate: 55%) recovery of principal in the event of a payment default.

The debt includes a $440 million first-lien term loan due 2025 and a $75 million revolving credit facility due 2023.

S&P also assigned a CCC+ issue-level rating to the company's proposed $160 million second-lien term loan due 2026. The 6 recovery rating reflects an expectation of negligible (0%-10%; rounded estimate: 0%) recovery.

The company will use the net proceeds to refinance outstanding debt, with $45 million available to fund future acquisitions.

“The rating reflects our view of CVS Holdings' aggressive acquisition model that is somewhat mitigated by its ability to expand profit and cash flows, and good industry tailwinds with limited reimbursement risks and an aging population,” the agency said in a news release.

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