OREANDA-NEWS. S&P Global Ratings said today it assigned its 'B+' corporate credit rating to Buffalo Grove, Ill.-based LBM Borrower LLC (U. S. LBM). The rating outlook is stable.

LBM Borrower LLC is assuming the debt of U. S. LBM Holdings LLC. We will subsequently withdraw the corporate credit rating on U. S LBM Holdings LLC.

"The stable rating outlook reflects our expectation that the company will continue to generate positive free cash flow and maintain adequate liquidity while maintaining total leverage below 6x over the next 12 months, pro forma for recent acquisitions," said S&P Global Ratings credit analyst Maurice Austin. "The outlook also reflects our expectation that liquidity will remain adequate to meet all of the company's obligations, including capital spending requirements, and that availability under the secured revolving credit facility will be adequate to fund working capital needs."

A negative rating action is less likely in the next 12 months, given our favorable outlook for home construction and remodeling spending. However, we could take such an action if the U. S. housing recovery stalls and forecast EBITDA falls in excess of 25% below our 2017 forecast, causing leverage to deteriorate above 8x.

We are unlikely to upgrade the company over the next year given its ownership by a private equity firm and an acquisitive financial policy. Based on our criteria, we would continue to view financial risk as highly leveraged even if debt to EBITDA declines to below 5x.