Fitch ups Tempur Sealy, rates loan BBB-

Fitch Ratings said it upgraded the ratings of Tempur Sealy International, Inc. (TPX) and Tempur-Pedic Management, LLC by one-notch including the long-term issuer default ratings to BB+ from BB. In addition, Fitch gave BBB-/RR1 ratings to the $300 million delayed draw senior secured term loan at TPX and co-borrower Tempur-Pedic Management.

The agency said it removed the ratings from under criteria observation, where they were placed following the publication of the updated recovery ratings criteria on April 9.

“The upgrade reflects TPX's continued strong operating momentum that began pre-pandemic and has exceeded Fitch's expectations for 2021. The improved operating performance has been driven by expanded distribution and market share gains supported by operating initiatives that expanded TPX's omni-channel presence, enhanced the brand/product portfolio and improved manufacturing capabilities,” the agency said in a press release.

The outlook is stable. “Fitch believes this has led to a sustainable competitive advantage with increased confidence in TPX's ability to sustain EBITDA of over $1 billion. Barring any large debt financed acquisition, Fitch projects TPX will maintain long-term gross leverage in the low 2x range,” the agency said.

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