S&P rates Covia, loan B-

S&P said it gave Covia Holdings LLC and its planned $806 million senior secured term loan due 2026 B- ratings. The loan’s recovery rating is 3, reflecting an expectation of meaningful (50%-70%; rounded estimate: 50%) recovery default.

Covia emerged from bankruptcy on Dec. 31. “We expect Covia to maintain steady credit measures, including adjusted debt leverage in the 3.5x-4.5x range, as its operations recover over the next 24 months. Covia continues to have a substantial amount of debt and, by our estimation, over $40 million in annual interest payments. Nevertheless, we anticipate that the company will have sufficient and steady earning streams to support its capital structure,” S&P said in a press release.

The outlook is positive. “The positive outlook reflects that we could raise our rating on Covia over the next 12 months if industry conditions develop in line with our expectations and as the company builds its track record after the recent restructuring,” the agency said.

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