S&P ups El Pollo Loco loans to B

Standard & Poor’s said it assigned its B corporate credit rating and stable outlook to El Pollo Loco Holdings Inc.

At the same time, the agency raised its issue-level rating on the company’s senior credit facility, consisting of a $15 million revolver and $190 million term loan, to B from B-. The 3 recovery rating for the facility remains unchanged, indicating an expectation for meaningful (50% to 70%) recovery in the event default.

S&P is also withdrawing its CCC issue-level rating on the company’s second-lien term loan given pay down using IPO proceeds.

"El Pollo Loco’s ‘weak’ business risk profile reflects its narrow focus on flame-grilled chicken in five U.S. states, with almost 90% of company-owned and franchised restaurants in California," S&P credit analyst Diya Iyer said in a news release. "It also reflects limited store growth in 2013 and 2014 and intense competition among both fast-casual peers including Chipotle Mexican Grill and quick-service peers including Taco Bell."

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