S&P cuts Rent-A-Center, rates notes BB-

Standard & Poor's said it lowered its corporate credit rating on Rent-A-Center Inc. to BB from BB+. The outlook is stable.

At the same time, S&P assigned a BB- issue-level rating and a 5 recovery rating to the proposed $250 million senior unsecured notes. The 5 recovery rating indicates an expectation for modest (10% to 30%) recovery of principal in the event of a payment default.

S&P also lowered the issue-level rating on the company's existing 6 5/8% senior notes to BB- from BB, also with a 5 recovery rating.

Rent-A-Center is issuing the notes to fund a $200 million accelerated share repurchase, to repay $46 million of existing revolver borrowing and to fund other expenses related to the transaction.

The rating on Rent-A-Center reflects S&P's assessment that while the company's business risk profile will remain "fair" in the coming year, the financial risk profile will return to "significant" from "intermediate" due to higher-than-expected debt levels, said S&P credit analyst Diya Iyer in a news release.

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