S&P rates GameStop notes B-

S&P said it assigned its B- issue-level and 3 recovery ratings to GameStop Corp.'s proposed secured notes. The 3 recovery rating reflects S&P’s expectation for meaningful recovery (50%-70%; rounded estimate: 50%) in the event of a default.

At the same time, S&P lowered the rating on the existing unsecured notes to CCC+ from B- and revised the recovery rating to 5 from 3. The 5 recovery rating indicates S&P’s expectation for modest recovery (10%-30%; rounded estimate: 15%) due to the addition of secured debt in the capital structure offset by value from the unpledged collateral from international operations.

The agency also affirmed the B+ issue-level and 1 recovery ratings (90%-100%; rounded estimate: 95%) on the company's ABL facility.

GameStop launched an exchange offer for its about $415 million in unsecured notes due in March 2021 in a par-for-par transaction for newly issued secured notes. “We expect the contemplated transaction will help improve the company's debt maturity profile while maintaining liquidity if a significant amount of notes are exchanged,” S&P said in a press release.

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