At Home Group Downgraded To 'CCC+' From 'B' On Weak Expected Performance Due To Coronavirus Pandemic, Outlook Negative

  • We expect that U.S.-based home décor retailer At Home Group Inc.'s operating performance will substantially decline due to the coronavirus pandemic and weaker economic outlook, which increases the likelihood that it will face headwinds in refinancing its 2022 term loan maturity at par.
  • Therefore, we are lowering our issuer credit rating on At Home by two notches to 'CCC+' from 'B'.
  • At the same time, we are lowering our issue-level rating on the company's term loan B to 'CCC+' from 'B'. Our '3' recovery rating remains unchanged.
  • The negative outlook reflects the potential that we will downgrade At Home if macroeconomic conditions deteriorate further, diminishing the likelihood that it will be able to refinance its term loan maturity as it comes due.
NEW YORK (S&P Global Ratings) March 26, 2020--S&P Global Ratings today took the rating actions listed above. The downgrade reflects our view that At Home's operating performance will be substantially weakened this year due to the coronavirus pandemic following a challenging fiscal year 2020. Therefore, we believe it is increasingly likely that the company will face difficulty in refinancing its debt at par, which leads us to view its capital structure as unsustainable.
The negative outlook reflects the sizable risk to At Home's operating performance in fiscal year 2021, given the expected decline in its revenue stemming from the coronavirus pandemic, and the execution risks associated with the challenges it has faced over the last 12 months.
We could lower our rating on At Home if we believe there is an increased risk of a default in the next 12 months. This could occur if the company's performance does not rebound sufficiently in advance of its 2022 maturities such that we believe a refinancing at par is increasingly unlikely. We could also lower the rating if we believe the likelihood of a below-par repurchase has materially increased.

We could raise our ratings on At Home or revise our outlook to stable if we believe the company will be able to refinance its 2022 term loan at par, which would likely require an improvement in the macroeconomic situation. We would also need to be confident that the company's operating performance would recover and stabilize before raising our rating.
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