Ratings upgrade for Dunkin' following I.P.O.

by Josh Sosland
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NEW YORK — Standard & Poor’s Ratings Services on Oct. 6 raised the corporate credit rating of Dunkin’ Brands Inc. to B+ from B. Dunkin’s outlook is stable.

S.&P. also raised the issue-level rating on Dunkin’s senior secured bank credit facilities to B+ from B. The ratings agency left Dunkin’s recovery rating at 3, which means it would be expected a creditor would recover the high end of 50% to 70% in the event of a payment default.

The upgrade follows a late July initial public offering of more than 25 million Dunkin’ shares.

“The B+ rating on Dunkin’ Brands reflects the meaningful improvement in the company’s credit production measures following the completion of its I.P.O. and subsequent repayment of debt,” said Andy Sookram, credit analyst at S.&P. “We expect that company’s leverage ratio to strengthen over the next year, as new store openings and menu offerings augment earnings and Dunkin’ uses excess cash flows to reduce debt.”

Mr. Sookram said the Dunkin’ credit profile improved because of the offering “but in our view remains highs leveraged.”

S.&P. said the resiliency of Dunkin’ operation prompted the stable outlook.

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