S&P downgrades Coty

S&P said it lowered its issuer credit rating on Coty Inc. and issue-level rating on its unsecured debt to B+ from BB-.

At the same time, the agency lowered the rating on the company's senior secured debt to BB- from BB. The recovery rating remains 2, indicating an expectation of substantial recovery (70%-90%; rounded estimate: 75%) in the event of a payment default.

Subsidiary Coty BV is a co-borrower under the revolver.

The agency also lowered the rating on the senior unsecured debt to B+ from BB-. The recovery rating remains 4, indicating an expectation for average recovery (30%-50%; rounded estimate: 35%) in the event of a payment default.

“The downgrade reflects Coty's significant debt burden, difficulty turning around its consumer beauty segment, and our belief that leverage will remain above 5x until fiscal 2022,” the agency said in a news release.

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