S&P assigns BB+ to Rackspace notes, loan

Standard & Poor’s said it assigned its BB+ corporate credit rating to Rackspace Hosting Inc. The outlook is stable.

At the same time, S&P assigned a BB+ issue-level rating and 3 recovery rating to the company’s proposed $350 million senior unsecured notes due 2024 and its $200 million amended senior unsecured revolving credit facility. The 3 recovery rating indicates an expectation for meaningful (50%-70%, upper half of the range) recovery in the event of a payment default.

“The rating on Rackspace primarily reflects the company’s low pro forma adjusted net leverage in the low-1x area along with its scale, diverse product portfolio, good revenue visibility, and extensive customer support that position it to take advantage of the increasing demand for data and IT outsourcing,” said S&P credit analyst Rose Askinazi in a news release.

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