S&P upgrades HT Intermediate

S&P said it affirmed the CCC corporate credit rating and negative outlook on HT Intermediate Holdings Corp.

The agency also said it raised the rating on the senior notes to B- from CCC and revised the recovery rating to 1 from 3.

The 1 recovery rating indicates 90% to 100% expected default recovery.

The upgrade reflects a belief that the announced guarantee on Hot Topic Inc.'s senior notes by Torrid improves the likelihood that obligations of this debt issue will be paid on time and in full, and that recovery prospects for the issue have improved because the guarantee is secured by a 100% equity pledge from Torrid Inc., S&P said.

Although the agency said it believes the settlement agreement could lower the possibility of proactive debt restructuring over the next 12 months, the CCC corporate credit rating was affirmed, along with the negative outlook because the agreement does not enhance Hot Topic's liquidity and has no effect on Hot Topic's ability to service its own debt.

The negative outlook reflects an expectation that operating performance will remain challenged given the increasingly competitive retail environment, resulting in meaningfully negative free operating cash flow generation and tightening liquidity over the next 12 months, S&P said.

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