S&P rates Prog, notes BB-

S&P said it assigned BB- ratings to PROG Holdings Inc. (Progressive) and its planned $600 million of senior unsecured notes. The notes’ recovery rating is 4.

“Recent government stimulus has benefited consumers and improved lease payment performance at Progressive. Lower write-off rates were the primary driver of S&P Global Ratings-adjusted EBITDA margins improving about 160 basis points (bps) in 2020 to 13.8%. We expect further expansion of up to 100 bps in 2021. However, as excess unemployment benefits and stimulus funding dwindle, we expect Progressive's lease portfolio performance and profitability to normalize,” the agency said in a press release.

S&P said it forecasts EBITDA margins declining to about 12.5% in 2022, in line with 2019. “Through expanding its retail partnerships, revenue has consistently increased in the double-digit percent area over the past several years.”

The proceeds will be used to fund share buybacks and for general corporate purposes.

The outlook is stable.

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