S&P rates AAG notes B-

S&P said it assigned a B- issuer credit rating to AAG FH LP, along with B- rating and 4 recovery rating on the company's proposed $225 million senior unsecured notes.

AAG is planning to refinance its capital structure with a new unsecured notes issuance, S&P said.

The ratings reflect the company's exposure to the cyclical and fragmented automotive retail industry, along with a view of AAG's high geographic concentration, small scale and short track record of operations, S&P said.

These factors are partially mitigated by a view of the company's low-cost operating model with strong free cash flow conversion and favorable brand mix, the agency said.

The stable outlook reflects an expectation that adjusted debt-to-EBITDA should be 6x to 8x and adjusted EBITDA interest coverage should be in the low 2x range over the next couple of years, S&P said.

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