S&P upgrades Del Monte

S&P said it upgraded Del Monte Foods Inc. to B- from CCC+ and its debt to B- on the issuer upgrade. The recovery remains 3, indicating an expectation for meaningful (50%-70%; rounded estimate: 65%) recovery in default.

“The upgrade reflects significant deleveraging, primarily driven by cost-savings initiatives, a favorable mix shift, and lower debt balances. DMFI's sales grew about 12% through the first three quarters of its fiscal 2021 (ending April 30, 2021), primarily due to strong demand for the company's shelf-stable product portfolio of packaged vegetables and broths as U.S. consumers cooked more at home during the pandemic,” S&P said in a press release.

The agency said it expects DMFI's full-year fiscal 2021 revenue will moderate substantially from the 12% year-to-date growth as it laps the pantry loading period from March to April 2020 in its fourth quarter.

The outlook is positive.

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