S&P ups Restaurant Brands notes, rates loan BB-

S&P said it affirmed its B+ corporate credit rating on Restaurant Brands International Inc.

The outlook is stable.

At the same time, the agency assigned a BB- issue-level rating to subsidiary 1011778 BC ULC's $4.46 billion term loan B and $500 million revolving bank loan. The recovery rating is 2, reflecting an expectation of substantial (the low end of the 70%-90% range) recovery in the event of default.

S&P also raised its ratings on the company's $1.25 billion senior secured notes due 2022 to BB- from B+. The recovery rating was revised to 2 from 3, given that it ranks pari passu with the new term loan and benefits from the paydown of secured debt.

The B issue-level and 6 recovery ratings on subsidiary 1011778 BC's second-lien debt are unchanged. The 6 recovery ratings debt represent negligible (0%-10%) recovery in a default scenario.

Finally, the agency revised its liquidity modifier to strong from adequate, reflecting the company's large cash balances and its low capital intensity.

S&P said it views the proposed refinancing as a modest credit positive event as a result of a modest reduction in debt and extended maturities. The agency expects stable operating performance, along with slightly lower debt, to result in somewhat improved credit metrics, including leverage in the 5 times to 5.5 times range in fiscal 2017.

Still, S&P continues to expect the company to pursue potential future acquisitions, possibly using additional debt.

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