S&P rates CD&R Hydra loan CCC+

S&P said it affirmed its B corporate credit rating on CD&R Hydra Buyer Inc. The outlook is stable.

At the same time, the agency assigned a CCC+ issue-level rating to the company's proposed $125 million second-lien term due 2026. The 6 recovery rating indicates an expectation for negligible (0%-10%; rounded estimate: 0%) recovery in the event of a payment default.

Additionally, S&P affirmed the B issue-level rating on the company's $395 million first-lien term loan due 2024. The 3 recovery rating remains, indicating meaningful (50%-70%; rounded estimate: 60%) recovery.

The agency said the affirmation follows CD&R Hydra's announcement that it is issuing $285 million of additional debt to fund its acquisitions of Ryan Herco Flow Solutions and Price Engineering and add cash to its balance sheet.

“We estimate that the transaction will increase the company's pro forma adjusted debt-to-EBITDA above 7x, which is higher than our previous expectations but still appropriate for the current rating,” S&P said in a news release.

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