Moody’s raises Mattress Firm, loan

Moody's Investors Service said it upgraded Mattress Firm Holding Corp.'s corporate family rating to B1 from B2 and probability of default rating to B1-PD from B2-PD.

The agency also upgraded to Ba3 from B1 the rating on the senior secured term loan of Mattress Holding Corp., a subsidiary of Mattress Firm Holding Corp. and parent company of the primary operating entity, Mattress Firm, Inc.

These actions conclude the review for upgrade initiated on June 16 upon the adoption of Moody's updated approach for standard adjustments for operating leases, which is explained in the cross-sector rating methodology Financial Statement Adjustments in the Analysis of Non-Financial Corporations, published on June 15.

The SGL-2 speculative grade liquidity rating was affirmed.

The outlook is stable.

Moody’s said the upgrade reflects Mattress Firm's roughly 1.7 times decline in lease-adjusted debt/EBITDA from 6.2 times to 4.5 times (as of May 5) due to changes in the agency’s approach for capitalizing operating leases. Moody's expects that the company will continue to integrate its Sleep Train and Back to Bed acquisitions with no meaningful issues and achieve growth through new store openings and low-single-digit same store sales increases.

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