Research Update: Blackhawk Network Holdings Inc. Downgraded To 'B-' On Rising Uncertainty About Consumer Spending Amid COVID-19

S&P Global Ratings has revised its U.S. real GDP growth expectations for 2020 to negative 1.0% to negative 1.5% from 1.9% because of the disruption related to COVID-19. We now expect significant downside to consumer spending in the U.S. and believe that the risks are mounting for a macro-economic recovery in the second half of the year. We expect that Blackhawk will face declining revenues and EBITDA in 2020 due to its significant exposure to consumer spending and risks are rising for its business model given the inherent seasonality. We now forecast negative free cash flow and for leverage to reach 9.5x in 2020. As a result, we are downgrading Blackhawk Network Holdings Inc. to 'B-' from 'B'. The outlook

...- S&P Global Ratings has revised its U.S. real GDP growth expectations for 2020 to negative 1.0% to negative 1.5% from 1.9% because of the disruption related to COVID-19. We now expect significant downside to consumer spending in the U.S. and believe that the risks are mounting for a macro-economic recovery in the second half of the year. - We expect that Blackhawk will face declining revenues and EBITDA in 2020 due to its significant exposure to consumer spending and risks are rising for its business model given the inherent seasonality. We now forecast negative free cash flow and for leverage to reach 9.5x in 2020. - As a result, we are downgrading Blackhawk Network Holdings Inc. to 'B-' from 'B'. The outlook is stable. - We are also lowering our issue-level rating on the company's senior secured first-lien debt and senior secured second-lien debt to 'B-' and '###', respectively, from 'B' and '###+'. - The respective '3' and '6' recovery ratings are unchanged, indicating our expectation...

Research Update