S&P rates Talbots loans B, CCC+

Standard & Poor's said it assigned its B corporate credit rating to Talbots Inc.

The outlook is stable.

The agency also assigned a B issue-level rating to the company's $255 million first-lien term loan with a 3 recovery rating, indicating an expectation of meaningful (50%-70%) recovery in the event of a payment default.

At the same time, S&P assigned a CCC+ issue-level rating to the company's $100 million second-lien term loan with a 6 recovery rating, indicating an expectation for negligible (0%-10%) recovery in the event of payment default.

The company said it will use proceeds from the loans to repay existing debt and fund a dividend to its sponsors.

"The ratings on Talbots reflect our assessment of the 'weak' business risk profile and 'highly leveraged' financial risk profile," S&P credit analyst David Kuntz said in a news release.

"The business risk profile incorporates our view of the company's participation in the highly competitive and widely fragmented specialty apparel industry. We believe the company is a medium size player in this segment but does not have appreciable size, scale, or scope."

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