S&P: TVL Finance notes B-, view stable

S&P said it revised the outlook on Thame and London Ltd. (Travelodge) to stable from positive and affirmed its B- corporate credit rating.

At the same time, the agency assigned an issue rating of B- and a recovery rating of 3 to the proposed £165 million senior secured notes due to mature in May 2023 to be issued by TVL Finance plc, a finance vehicle fully owned by Travelodge. The 3 recovery rating indicates an expectation of meaningful recovery prospects (50%-70%, rounded estimate 65%) in case of default.

S&P affirmed the B- issue rating on Travelodge's existing senior secured notes. The 3recovery rating is unchanged.

The agency also affirmed the B+ issue rating on the existing £50 million super senior revolving credit facility issued by TVL Finance. The recovery rating is unchanged at 1.

S&P said the outlook revision follows slower-than-expected deleveraging at the company, due to slower operating improvements. In the agency’s view, the hotel industry is facing a more uncertain future due to Brexit, which could slow growth in the U.K. economy.

There are also cost pressures associated with the U.K.'s National Living Wage and business rates, S&P added.

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