S&P rates Adient US term loan BB-

S&P said it assigned its BB- issue-level rating and 2 recovery rating to Adient US LLC's proposed $1 billion term loan B due 2028 and placed the issue-level rating on CreditWatch with positive implications in line with all of S&P’s existing ratings on the company.

The 2 recovery rating indicates an expectation for substantial (70%-90%; rounded estimate: 75%) recovery for the senior secured lenders in the event of a payment default.

The company plans to use the proceeds from this term loan to refinance its existing $788 million term loan B. Specifically, Adient will use the incremental proceeds, along with cash from its balance sheet, to pay off its existing $800 million senior secured notes due 2026. The company has tendered $640 million of these notes and plans to redeem the remaining $160 million over the next few months.

“For this reason, we also raised our issue-level rating on Adient's existing senior secured debt to BB- from B+ and revised our recovery rating to 2 from 3. The issue-level rating remains on CreditWatch, where we placed it with positive implications on March 12, 2021,” S&P said in a news release.

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