S&P assigns StoneMor notes CCC

S&P said it assigned StoneMor Inc.’s planned $400 million of senior secured notes CCC and 3 recovery ratings. The 3 recovery rating indicates an expectation for meaningful (50%-70%; rounded estimate: 55%) recovery in default.

The proceeds will be used to refinance its paid-in-kind toggle notes with $335 million outstanding as of year-end 2020.

Concurrently, S&P placed StoneMor’s ratings on CreditWatch with positive implications. The CreditWatch placement follows the proposal to refinance the PIK notes with covenant-lite senior secured notes and place a new $40 million super senior revolver, the agency said.

“We expect to resolve the CreditWatch when the transaction closes. At that time, we could raise our issuer credit rating on STON and our issue-level rating on the proposed notes to CCC+ if the company refinances its existing PIK notes with covenant-lite senior notes, which would alleviate our previous concerns about its covenant compliance,” S&P said in a press release.

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