S&P rates Korn Ferry notes BB

S&P said it assigned BB ratings to Korn Ferry and its proposed $400 million of notes due 2027 with a recovery rating of 4. The 4 recovery rating reflects S&P’s expectation for average (30%-50%; rounded estimate: 30%) recovery in the event of a payment default.

The company also is refinancing its unrated $650 million revolver due 2024. The company will use the proceeds to repay $277 million of outstanding revolver borrowings and add $123 million of cash to its balance sheet.

“Our rating on Korn Ferry reflects the company’s strong market position in the highly fragmented and competitive executive search industry, its unique business model that enables it to generate higher EBITDA margins (over 18%) than those at some of the temporary staffing and consulting companies we rate, as well as its good geographic and industry diversity, strong cash flow generation, and low leverage,” said S&P in a press release.

The outlook is stable.

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