S&P ups Fender loan to BB-, view positive

Standard & Poor's said it affirmed its B corporate credit rating on Fender Musical Instruments Corp.

The outlook was revised to positive from stable.

The agency also raised the rating on Fender’s senior secured term loan due 2019 to BB- from B+ and revised the recovery rating to 1, indicating the prospect of very high recovery (90% to 100%) in the event of a payment default, from 2.

"Our outlook revision is based on our expectation of stronger credit ratios for fiscal 2014, in part because of the company's debt prepayment from free cash flow, but also from the net proceeds of the sale of the Guild, Ovation and Takamine guitar brands, and the sale of the assets of KMC percussion and the KMC Music wholesale distribution business," S&P credit analyst Stephanie Harter said in a news release.

"The lower debt level also results in greater recovery prospects for the term loan."

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