Moody’s rates Hostess Brands loan B1

Moody’s Investors Service said it assigned a B1 rating to Hostess Brands, LLC’s new $100 million senior secured revolver due 2024 and $985 million first-lien term loan due 2025.

These facilities will replace the company’s $100 million senior secured revolver due 2020 and $994 million first-lien term loan maturing 2022.

Moody’s also assigned a corporate family rating of B1 and a probability of default rating of B1-PD.

“Hostess’ B1 corporate family rating reflects its high financial leverage (5.3x debt/EBITDA as of June 30, 2019), concentration in low-growth snack cakes category, moderate scale among consumer goods companies, and rising freight and commodity costs.

“The rating also reflects Hostess’ well-known portfolio of snack cake brands, high profit margins, good cash flows and very good liquidity. The rating further reflects continued upside potential from the CloverHill acquisition in 2018,” Moody’s said in a press release.

The outlook is stable.

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