S&P raises Bare Escentuals

Standard & Poor's said it raised its corporate credit rating and senior secured bank loan rating on Bare Escentuals Beauty Inc. to B+ from B.

At the same time, the agency said it affirmed the 2 recovery rating on the company's first-lien credit facility, indicating the expectation for substantial recovery of principal in the event of a payment default.

The outlook is stable.

S&P said that the upgrade reflects continued improvement in credit protection measures, driven by ongoing debt reduction and strong operating performance through the first quarter of 2007.

The agency added that the ratings on Bare Escentuals reflect the company's narrow product focus and participation in the highly competitive and fragmented cosmetics industry, relatively small sales base, the risks associated with expanding and upgrading its operating platforms and a historically aggressive financial policy.

These factors are somewhat offset by the company's strong market position in the mineral-based cosmetics segment of the cosmetics industry, S&P said.

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