S&P ups Bakkavor to B

Standard & Poor's said it raised the long-term corporate credit rating on Bakkavor Group ehf to B from B- and removed the rating from CreditWatch, where it was placed with positive implications in January.

The outlook is stable.

The rating on the £350 million senior secured bond maturing in 2018 issued by Bakkavor Finance 2 plc is unchanged. The recovery rating of 4 also is unchanged, indicating 30% to 50% recovery in a default.

The upgrade reflects the completion of Bakkavor's £350 million senior secured bond issue and the raising of £380 million of senior revolving credit and term loan facilities, S&P said.

The proceeds will be used to repay its existing bank facilities, therefore improving its debt maturity profile, the agency said.

The rating reflects the group's highly leveraged capital structure, as well its high exposure to just two customers -Tesco plc and Marks & Spencer plc, S&P said.

These risks are partly mitigated by the group's well-established franchise, primarily in the United Kingdom, but also in continental Europe, where the group has good market positions and operating scale in its niche food processing businesses, the agency said.

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