S&P rates Neogen BB+, loan BBB-

S&P said it assigned a BB+ issuer rating to Neogen Corp. and BBB- issue and 2 recovery ratings to its $650 million planned senior secured term loan. The 2 recovery rating indicates substantial recovery (70%-90%; rounded estimate: 85%) in default.

“Our rating on Neogen reflects its strong competitive position in a desirable market. The highly fragmented food and animal safety industry has benefited from very strong trends over the past several years. These include increasing health consciousness among consumers, increasing awareness of food allergies, rising incomes in emerging markets, and a focus on food safety and supply amid the Covid-19 pandemic,” the agency said in a press release.

S&P said it anticipates mid- to high-single-digit percent organic growth over the next several years.

Additionally, Neogen plans to sell $350 million in unsecured debt later.

The outlook is stable, reflecting the view for continued double-digit percent yearly growth in revenue and adjusted debt to EBITDA kept under 3x, S&P said.

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