S&P Global Ratings said it is revising its outlook on the debt ratings of Winnebago Industries to “stable” from “negative”. The ratings agency believes RV demand could grow at least over the next few months as new buyers entering the market offset high unemployment.
S&P affirmed the ‘B+’ issuer credit rating on Winnebago and assigned a ‘BB’ issue-level rating and ‘1’ recovery rating to Winnebago’s proposed $300 million senior secured notes. The $300 million offering is expected to be used to repay the existing term loan and add cash to the balance sheet to bolster liquidity.
S&P said the stable outlook reflects the current backlog at Winnebago that could translate into higher RV demand through fiscal 2020, which ends in August, and possibly into fiscal 2021. As a result, S&P believes Winnebago will generate sufficient EBITDA to maintain its measure of anticipated leverage well below the 5x downgrade threshold at the current ‘B+’ rating, notwithstanding the sharp EBITDA decline experienced in recent months.
To see the full report from SGB Media, click here.
S&P said, “The outlook revision and ‘B+’ rating affirmation incorporate our updated forecast for adjusted debt to EBITDA in the 3.25x-4.25x range in fiscal 2020 and 2021 and reflect robust near-term demand for RVs. Winnebago’s fiscal third-quarter results, backlog, and recent comments and disclosures by RV industry participants suggest fiscal 2020 and 2021 results could be favorable compared to our previous forecast published on March 27, 2020, despite continued significant macroeconomic headwinds and uncertainty surrounding COVID-19 containment.
