S&P affirms Rent-A-Center

Standard & Poor's said it affirmed the BB corporate credit rating on Rent-A-Center Inc.

This action comes as the company is issuing $300 million of senior unsecured notes due in 2020. $200 million of the proceeds are expected to repay outstanding balances of its senior secured term loan. Remaining proceeds will be used for stock buybacks.

As a result of the senior secured debt reduction, S&P raised the company's senior secured recovery rating to 1 from 2 and senior secured issue level ratings to BBB- from BB+. The 1 recovery rating indicates expectation of 90% to 100% recovery.

The agency also assigned a BB- rating to the company's senior unsecured notes with 5 recovery rating to indicate expectation of 10% to 30% recovery.

"The rating on Rent-A-Center reflects our expectation that the company can increase profits modestly in the near term and will reduce debt with free cash flow over time, leading to relatively modest credit ratio enhancement," S&P analyst Charles Pinson-Rose said in a statement.

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