S&P rates Highland Group B+

Standard & Poor's said it assigned a B+ long-term corporate credit rating to Highland Group Holdings Ltd. (House of Fraser).

The agency also said it assigned a B+ rating to the proposed £250 million senior secured notes to be issued by House of Fraser (Funding) plc, a wholly owned subsidiary of Highland Group Holdings. The recovery rating is 4, indicating 30% to 50% expected recovery in a default.

The outlook is stable.

The ratings are based on preliminary information and are subject to the successful closing of the notes issuance, the signing of the new revolver, completion of the transaction and satisfactory review of the final documentation, S&P said.

The ratings reflect the group's satisfactory business risk profile, supported by its leading market position, portfolio of 61 well-located stores, strong United Kingdom brand recognition, partially de-risked and cyclically resilient business model, the agency said.

These strengths are partly offset by the fashion risks associated with House of Fraser's primarily premium product offering, strong competitive pressures from both high-street and online retailers and the currently weak macroeconomic environment in the United Kingdom and Ireland, S&P said.

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