Fitch rates Lendmark B

Fitch Ratings said it assigned LFS Topco, LLC (Lendmark) a B long-term issuer default rating and an expected rating of B for its planned senior unsecured debt offering, with an RR4 recovery rating. Fitch also gave a CCC+ rating to Lendmark's subordinated debt outstanding with an RR6 recovery rating.

“Lendmark's ratings reflect its modest but growing market position in the U.S. personal installment lending industry, robust risk-adjusted yields, relatively solid credit quality, and an increasingly diversified funding profile. The ratings also reflect Lendmark's monoline business model, higher risk appetite reflecting a heightened exposure to subprime borrowers, elevated leverage metrics and its partial private equity ownership, which increases the possibility of shareholder-friendly actions and adds long-term strategic uncertainty,” the agency said in a press release.

The expected rating on the senior unsecured debt is equalized with the long-term IDR, reflecting an expectation of average recovery prospects and seniority of the notes and the subordinated debt rating mirrors Fitch's expectation of poor recovery prospects and structural subordination of the notes, the agency said.

The outlook is stable.

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