S&P lifts Fender Musical

S&P said it raised its ratings on Fender Musical Instruments Corp. and its $400 million senior secured first-lien term loan to B from B-. The recovery rating is 3, indicating meaningful (50%-70%; rounded estimate: 55%) recovery in default.

The agency noted Fender beat its expectations, and except for a downturn, now sees the company sustaining free operating cash flow of more than $25 million in 2024 and 2025.

“Over the next two years, we believe Fender will be able to pay off a modest portion of outstanding debt. In 2024, Fender has a mandatory term loan pre-payment of $20 million due in May which could be funded with cash from the balance sheet and excess cash flow generation, or temporarily funded with ABL borrowings,” S&P said in a statement.

The outlook is stable.

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