S&P rates Imperva loans B-, CCC

S&P said it assigned its B- issuer credit rating to Imperva Inc. The outlook is stable.

At the same time, S&P assigned a B- issue-level and 3 recovery ratings to the company's $760 million senior secured first-lien term loan and $100 million revolving credit facility due 2023. The 3 recovery rating indicates an expectation of meaningful (50%-70%; rounded estimate: 65%) recovery in the event of a default.

S&P also assigned a CCC issue-level and 6 recovery ratings to the company's $290 million second-lien term loan due 2026. The 6 recovery rating indicates an expectation of negligible (0%-10%: rounded estimate: 0%) recovery in the event of a default.

“The rating on Imperva primarily reflects the company's extremely high pro forma leverage, which we estimate will exceed 18x at transaction close and remain over 19x through fiscal 2019. Additionally, we view a narrow focus on a subsector of the broader IT security market, small scale compared to its primary competitors, and weak profitability as key risk factors,” S&P said in a news release.

“Credit strengths include the company's increasing share of recurring revenues, above-industry growth rate, diversified customer base, and high customer retention rates.”

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