S&P lowers Loyalty Ventures

S&P said it lowered its ratings on Loyalty Ventures Inc. (LVI) and its term loan to B- from B and revised the loan’s recovery rating to 3 from 2. The 3 recovery rating reflects meaningful (50%-70%; rounded estimate: 60%) recovery in default.

“The downgrade reflects our view that weakening macroeconomic conditions and inflationary pressures will lead to elevated credit metrics through 2023,” S&P said in a press release.

The agency noted LVI lowered its 2022 EBITDA guidance. “We now estimate that the company will exit 2022 with a debt-to-EBITDA ratio in the mid-7x area as calculated on an S&P Global Ratings-adjusted basis and maintain it in the 7x area through 2023, which is a meaningful deterioration from our previous expectation of about 5.5x-6x. We estimate EBITDA of $95 million-$100 million on an S&P Global Ratings-adjusted basis.”

The outlook is negative.

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