S&P lifts LKQ notes to BB-

S&P said it raised its issue-level rating on LKQ Corp.'s $600 million 4¾% senior unsecured notes due in 2023 to BB- from B+ and revised the recovery rating to 5 from 6. The 5 recovery rating indicates an expectation for modest (10%-30%; rounded estimate: 10%) recovery in the event of a default.

The issue-level rating on the company’s subsidiary LKQ Italia Bondco SpA's €500 million 3 7/8% senior unsecured notes due in 2024 remains BB, and the recovery rating is 4, indicating an expectation for average (30%-50%; rounded estimate: 45%) recovery in the event of a default.

“The improvement in the issue-level and recovery ratings for the $600 million senior unsecured notes is due to a change in our assumptions regarding the enterprise value of the non-guarantors,” the agency said in a news release.

The issue-level rating on LKQ's revolver remains BB+ with a 2 recovery rating, although the rounded estimate of recovery moves down to 75% from 80%.

“Our ratings on LKQ Corp. reflect the company's leading position as a distributor of alternative replacement products for the automotive industry in the U.S. and Europe, which allows it to achieve competitive efficiencies in its distribution network and procurement,” S&P said in a news release.

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