U.S-based Heritage Grocers Group LLC's (Heritage) exited year-end 2024 with weaker-than-expected S&P Global Ratings-adjusted debt to EBITDA of 6.4x. We forecast leverage will remain above 6x through fiscal 2025 due to persistently soft consumer spending trends, exacerbated by uncertainty related to tariffs. As a result, we lowered our issuer credit rating on Heritage to 'B-' from 'B'. At the same time, we lowered our issue-level rating on the company?s senior secured debt to ?B-? from ?B?; the ?3? recovery rating is unchanged, indicating our expectation of meaningful (50%-70%; rounded estimate: 60%) recovery in the event of a payment default. The stable outlook reflects our expectation for gradual improvement in the company?s operating performance and credit protection metrics over the next
