S&P rates Coty facilities BB+

S&P said it affirmed its BB corporate credit rating on Coty Inc. The outlook is stable.

At the same time, the agency assigned a BB+ issue-level rating to the company's proposed $9 billion senior secured credit facilities, consisting of a $3 billion revolver due 2023, a $1.25 billion term loan A due 2023, a euro term loan A equivalent to $2.25 billion due 2023, a $1 billion term loan B due 2025 and a euro term loan B equivalent to $1.5 billion due 2025.

The 2 recovery rating indicates an expectation of substantial recovery (70%-90% rounded estimate 75%) in the event of a payment default.

Proceeds will be used to repay a portion of its existing debt, including debt that resides at Galleria Co.

The agency said the affirmation reflects an expectation that Coty will improve its operating performance, although progress could be uneven, resulting in stronger credit metrics and increases in free cash flow.

“The affirmation also reflects a view that the recapitilization will be leverage-neutral,” S&P said in a news release.

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