S&P affirms Fender, gives loan B+

Standard & Poor's said it affirmed the B+ corporate credit rating on Fender Musical Instruments Corp. and revised the outlook to stable from negative.

At the same time, S&P said it assigned a B+ rating, the same as the corporate credit rating, to the company's $200 million senior secured term loan facility, with a recovery rating of 3.

The revised outlook is based on Fender achieving its May 2006 bank model for fiscal 2006 and maintaining appropriate credit protection measures and liquidity, the agency said.

"We believe the company's improved infrastructure, which has contributed to significantly improved inventory management, will help the company maintain operating stability over the intermediate term," said S&P credit analyst Kenneth Shea.

"The new bank facility will also result in lower interest expense, enhancing the company's liquidity and credit measures."

According to S&P, the ratings are based on Fender's high debt leverage and narrow business focus and the discretionary nature of its products while these factors are somewhat mitigated by the company's strong market share and global brand names in the guitar-and amplifier-segment, including Fender, Squier, Gretsch and Guild.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.