Research Update: US Foods Inc. Downgraded To 'BB', Ratings Remain On CreditWatch Negative Due To Effects From COVID-19

The COVID-19 pandemic is leading to a growing number of event cancellations and closures of restaurants, schools, and other institutions. An emphasis on social distancing to avoid spreading the virus is also significantly reducing restaurant traffic. We believe foodservice distributors will suffer significant near-term revenue and profit losses because of their reliance on these sectors. We are lowering our issuer credit rating on US Foods Inc. (USF) to 'BB' from 'BB+', our issue-level rating on its senior secured debt to 'BB' from 'BB+', and our issue-level rating on its senior unsecured debt to 'BB-' from 'BB'. All of our ratings on the company remain on CreditWatch, where we placed them with negative implications on March 6, 2020. The CreditWatch reflects

...- The COVID-19 pandemic is leading to a growing number of event cancellations and closures of restaurants, schools, and other institutions. An emphasis on social distancing to avoid spreading the virus is also significantly reducing restaurant traffic. - We believe foodservice distributors will suffer significant near-term revenue and profit losses because of their reliance on these sectors. - We are lowering our issuer credit rating on US Foods Inc. (USF) to '##' from '##+', our issue-level rating on its senior secured debt to '##' from '##+', and our issue-level rating on its senior unsecured debt to '##-' from '##'. - All of our ratings on the company remain on CreditWatch, where we placed them with negative implications on March 6, 2020. - The CreditWatch reflects the potential for a lower rating over the next few months after we assess the near- and long-term effects of COVID-19 on USF's credit metrics and liquidity position. However, it is possible that we will leave our rating on...

Research Update