S&P lifts J.Crew, assigns loan B, notes CCC+

Standard & Poor's said it lowered the corporate credit rating on J. Crew Group Inc. to B from BB- and removed the ratings from CreditWatch, where they were placed with negative implications in November.

The outlook is stable.

The agency also said it assigned an issue-level rating of B to the company's term loan B with a recovery rating of 3, indicating 50% to 70% recovery in a default.

S&P also assigned an issue-level rating of CCC+ to the unsecured notes with a recovery rating of 6, indicating 0% to 10% recovery in a default.

The ratings reflect the highly leveraged capital structure with thin cash flow protection measures as a result of the leveraged buyout, the agency said.

Leverage is expected to be in the upper-6x range over the near term, with interest coverage below 2x, S&P said.

This leverage ratio overshadows the company's fair business risk profile with its good position in the specialty apparel retail segment, the agency said.

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