S&P rates Resideo loans BBB-, notes BB+

S&P said it assigned its BB+ issuer credit rating to Resideo Technologies Inc. The outlook is stable.

At the same time, the agency assigned its BBB- issue-level rating and 1 recovery rating to Resideo Funding Inc.'s credit facilities, consisting of a $350 million revolver due in 2023, a $350 million term loan A due in 2023 and a $475 million term loan B due in 2025.

The 1 recovery rating reflects an expectation for very high (90%-100%; rounded estimate: 95%) recovery in the event of a payment default.

S&P also assigned a BB+ issue-level rating and 3 recovery rating to the senior unsecured notes issued by Resideo Funding. The recovery rating reflects an expectation for meaningful (50%-70%; rounded estimate: 65%) recovery.

“Our ratings on Resideo reflect the company's good operational scale, with annual revenue of over $4.5 billion and an installed base of over 150 million homes,” the agency said in a news release.

“This strength is partially offset by the company's exposure to cyclical new home starts, lower profit margins than those of peers, and leveraged capital structure.”

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