S&P rates Chobani notes CCC+, view to negative

S&P said it revised to negative from stable the outlook on Chobani Global Holdings LLC.

The agency also affirmed the company’s B corporate credit rating.

S&P also said it lowered the rating on Chobani's senior secured facilities to B from B+ with a revised recovery rating of 3 from 2, indicating 50% to 70% expected default recovery.

The agency also said it assigned a CCC+ rating to the company's proposed $530 million senior unsecured notes due in 2025 with a recovery rating of 6, indicating 0 to 10% expected default recovery.

S&P said it will withdraw the ratings on the company's existing second-lien term loan following the close of this transaction.

The outlook revision reflects higher-than-expected leverage through 2017 for the company following lower-than-expected adjusted EBITDA growth in 2016 due to one-time costs, the agency said.

The company’s 2017 forecast also was revised to assume a lower growth rate than previously assumed, S&P said.

While the agency said it expects continued earnings growth in 2017 as the company invests in product categories that have resonated well with consumers, it also anticipates about a 20% rise in the cost of milk in 2017.

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