S&P assigns BB- to Sally notes

S&P said it assigned BB- issue-level and 4 recovery ratings to Sally Beauty Holdings Inc. subsidiary Sally Holdings LLC’s planned $600 million of senior unsecured notes due 2032. The 4 recovery rating indicates meaningful recovery to lenders (30%-50%; rounded estimate: 40%).

The ratings on the new notes are aligned with those on Sally’s outstanding senior unsecured notes.

Sally Beauty will use the proceeds, along with balance sheet cash and availability under its asset-based lending facility, to refinance its $680 million of senior unsecured notes.

“We revised our rounded estimate for recovery on the unsecured debt to 40% from 35% to reflect that the reduction in the company's outstanding notes will improve recovery prospects. While we view the refinancing as modestly deleveraging, we continue to forecast leverage in the mid- to the high-2x area through fiscal 2024,” S&P said in a statement.

The outlook is stable.

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