S&P affirms Option Care loan at B-

S&P said it affirmed its B- issuer credit rating on Option Care Health Inc. and the B- rating on its first-lien term loan.

That said, the capital structure change has resulted in S&P’s estimate for lower recovery prospects to secured creditors to a rounded estimate of about 50% from about 60% previously. This is still within S&P’s 50%-70% range for a 3 recovery rating, albeit at the lower end.

S&P said its B- issue-level and 3 recovery ratings on Option Care's first-lien debt indicate an expectation for meaningful recovery (50%-70%; rounded estimate: 50%) in the event of a payment default. The revised recovery percentage estimate for secured creditors to about 50% from about 60% reflects the increase in first-lien debt that will result from this transaction.

Option Care plans to raise a $250 million add-on to its existing senior secured first-lien term loan due in 2026. S&P said it expects Option Care will use the proceeds primarily to repay the full amount outstanding under its second-lien payment-in-kind toggle notes due August 2027, which S&P said would be leverage neutral.

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