S&P lifts American Greetings notes to B+

Standard & Poor's said it affirmed its B+ corporate credit rating on American Greetings Corp.

The outlook is positive.

At the same time, the agency affirmed the BB issue-level rating on the senior secured credit facility (which consists of a $250 million revolving credit facility due 2018 and a $350 million term loan due 2019). The recovery rating remains 1. It also affirmed the B- issue-level rating on the company's $285 million holding company payment-in-kind notes due 2019. The recovery rating remains 6.

In addition, S&P raised the rating on the senior unsecured notes due 2021 to B+ from B and revised the recovery rating to 3, indicating an expectation for meaningful (50% to 70%, at the high end of the range) recovery in the event of payment default, from 5.

"The positive outlook reflects our belief that American Greetings' credit measures will continue to improve over the next year from continued debt payment from excess free cash flow," S&P credit analyst Stephanie Harter said in a news release.

The agency estimates that adjusted EBITDA margin improved by about 50 basis points to 15.2% for the 12 months ended Feb. 28, 2015, from 14.7% at Feb. 28, 2014, as the company benefitted from costs savings programs and higher volumes in its core greeting card business.

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