S&P lowers Staples loan

S&P said it lowered its issue-level rating on Staples Inc.'s proposed term loan to B+ from BB-. At the same time, S&P revised its recovery rating on the term loan to 3 from 2 because of the increase of the term loan to $2.9 billion from $2.7 billion.

The 3 recovery rating indicates an expectation for meaningful (50%-70%; rounded estimate: 65%) recovery for term loan lenders in the event of a payment default.

Staples also plans to reduce the unsecured notes to $1 billion from $1.3 billion. S&P said the reduction has no impact on its rating on these notes. The issue-level rating remains B- with a 6 recovery rating, reflecting an expectation for negligible recovery (0%-10%; rounded estimate: 0%).

“Our B+ corporate credit rating and the stable outlook reflect the company's elevated leverage pro forma for the acquisition by Sycamore Partners and our view of intense competition in the office supply distribution business including limited customer switching costs,” S&P said in a news release.

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