Research Update: Valvoline Inc. Outlook Revised To Negative; 'BB' Issuer Credit Rating Affirmed

We expect U.S.-based Valvoline Inc.'s operating performance to deteriorate at least over the near term due to the substantial coronavirus-related decline in miles driven. We are revising our outlook to negative from stable and affirming our 'BB' issuer credit rating on the company. At the same time, we are lowering our issue-level rating on the senior unsecured notes to 'BB-' from 'BB' following the company's proposed $300 million add-on to its existing $400 million senior unsecured notes due 2025. We are revising the recovery rating on the notes to '5' from '4' due to the increase in senior unsecured claims, reflecting our expectation for modest (10%-30%; rounded estimate 20%) recovery in the event of a payment default. We are affirming

...- We expect U.S.-based Valvoline Inc.'s operating performance to deteriorate at least over the near term due to the substantial coronavirus-related decline in miles driven. - We are revising our outlook to negative from stable and affirming our '##' issuer credit rating on the company. - At the same time, we are lowering our issue-level rating on the senior unsecured notes to '##-' from '##' following the company's proposed $300 million add-on to its existing $400 million senior unsecured notes due 2025. We are revising the recovery rating on the notes to '5' from '4' due to the increase in senior unsecured claims, reflecting our expectation for modest (10%-30%; rounded estimate 20%) recovery in the event of a payment default. We are affirming our '###-' issue-level rating on the company's senior secured bank credit facilities. The recovery rating on the bank facilities is unchanged at '1'. - The negative outlook reflects the potential for a lower rating over the next few quarters if the...

Research Update