S&P changes Beacon Roofing to positive

S&P said it affirmed its BB- corporate credit rating on Beacon Roofing Supply Inc. and revised the outlook to positive from stable.

At the same time, the agency affirmed the BB+ issue-level rating (two notches higher than the corporate credit rating) on the company's $450 million term loan due 2022 and the B+ issue-level rating (one notch lower than the corporate credit rating) on its $300 million senior unsecured notes due 2023.

The recovery rating on the term loan is 1, indicating an expectation of very high (90% to 100%) recovery for lenders in the event of a payment default. The recovery rating on the senior unsecured notes is 5, indicating an expectation of modest (10% to 30%, higher end of the range) recovery for lenders in the event of a payment default.

"The positive outlook on Beacon Roofing Supply reflects our expectation that the company is likely to improve credit measures to a point in line with a satisfactory financial risk profile, with a debt-to-EBITDA ratio of between 3x and 4x and FFO to debt of 14% to 20% over the next 12 to 24 months," S&P credit analyst Pablo Garces said in a news release.

"The outlook further reflects our belief that Beacon will maintain strong liquidity over the next 12 months."

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