U.S.-based specialty pet retailer PetSmart Inc. recently repaid about 15% of its term loan using after-tax net proceeds from the IPO of its Chewy subsidiary. S&P Global Ratings expects modest improvement in PetSmart's performance despite persistent industry headwinds. We are raising our issuer credit rating on PetSmart to 'B-' from 'CCC'. We are also raising our issue-level ratings on the company's first-lien debt to 'B' from 'CCC' and revising the recovery to '2' from '4', reflecting the debt reduction and an upward reassessment of enterprise value at simulated default following the IPO of Chewy. At the same time, we are raising our issue-level rating on the company's senior unsecured debt to 'CCC+' from 'CC', and revising the recovery to '5'
