S&P ups Conn’s notes, rates revolver BB-

S&P said it assigned its BB- issue-level and 1 recovery ratings to Conn's Inc.'s new $650 million asset-based lending revolving facility due May 2022.

The 1 recovery rating indicates an expectation for very high (90%-100%; rounded estimate: 95%) recovery in the event of default.

The agency raised the issue-level rating on Conn's $250 million senior notes due July 15, 2022 to B from B- and revised the recovery rating to 3 from 5, indicating an expectation for meaningful recovery (50%-70%; rounded estimate: 60%).

Conn's is refinancing its ABL revolver, extending the maturity date to 2022 and reducing the commitment amount to $650 million from $750 million.

“The upgrade reflects less priority debt assumed in the capital structure at default given the lower revolving credit facility amount,” S&P said in a news release.

“The lower priority debt results in greater enterprise value at default available to cover unsecured claims, because we already assume the secured claims would be fully recovered in a default scenario.”

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