S&P Global Ratings today raised the issue-level rating on Thor Industries Inc.’s senior secured term loan to ‘BBB-‘ from ‘BB+’ and revised the recovery rating on this debt to ‘1’ from ‘2’. The upgrade follows Thor’s term loan debt repayments totaling about $265 million during and after the company’s fiscal 2022 third quarter ended April 30.
S&P said, “In our view, the debt repayments would lead to higher recovery prospects for term loan lenders in a hypothetical default scenario.
“Our forecast for adjusted net debt to EBITDA remains in the 0.5x-1x range for fiscal years 2022 and 2023. Our updated assumptions incorporate a pullback in wholesale shipments starting in the fourth quarter of Thor’s fiscal 2022 ending July 31 and in fiscal 2023 after meaningful dealership-level inventory replenishment, particularly for towable recreational vehicles (RV). We believe our assumptions are consistent with Thor’s indication that North American industry shipments could decline about 10 percent in calendar 2022. We continue to assume Thor’s revenue generation will be good in fiscal 2022 and 2023 after incorporating a moderation in wholesale shipments.”
Photo courtesy Thor Industries