S&P lifts Victoria’s Secret notes

S&P said it raised its issue-level rating on Victoria’s Secret & Co.'s planned senior unsecured notes to BB- from B+ and revised the recovery rating to 4 from 5. The 4 recovery rating indicates an expectation for average (30%-50%; rounded estimate: 30%) recovery in default.

“We raised our rating on the proposed debt following VS' announcement that it will issue a $400 million first-lien term loan B and $600 million of senior unsecured notes. Previously, we assumed it would issue a $500 million term loan and $500 million of senior unsecured notes. Because of the change in the structure of the issuance and the reduction in the amount of senior secured borrowing, there is additional value available for the unsecured lenders, which improves their anticipated recovery in a simulated default scenario,” S&P said in a press release.

The agency also affirmed the BB+ issue-level rating on the company's senior secured term loan. The loan’s 1 recovery rating is unchanged and indicates an expectation for very high (90%-100%; rounded estimate: 95%) recovery in default.

The BB- issuer credit rating and stable outlook on VS are unchanged.

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