S&P upgrades Thor Industries

S&P said it raised the rating on Thor Industries Inc.'s senior unsecured notes to BB from BB- and revised the recovery rating to 3 from 5 to reflect significant debt repayment in the fourth quarter of fiscal 2023 (ended July 31).

As a result of the debt repayment, Thor has incremental excess collateral available to unsecured lenders in a recovery scenario, S&P noted.

The 3 recovery rating indicates an expectation of meaningful (50%-70%; rounded estimate: 65%) recovery under a hypothetical default scenario.

S&P’s BB issuer credit rating and stable outlook on Thor Industries are unchanged.

“Despite anticipated leverage of 1x-2x through 2024, rating upside is constrained by expected variability in the company's operating performance over the next one to two years as demand for recreation vehicles (RVs) has cooled from the very strong levels in fiscals 2021 and 2022, as well as the possibility that Thor can use leverage to complete large acquisitions occasionally given the company's track record and maximum leverage tolerance for acquisitions,” S&P said in a news release.

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