S&P Global Ratings revised its outlook on Enova International Inc. to stable from negative, citing the Chicago-based digital lender's improved leverage after reporting stronger-than-expected adjusted EBITDA.
Debt to adjusted EBITDA declined to 4.0x at the end of the second quarter from 5.0x at the end of 2017. S&P Global Ratings expects the company to continue to operate with debt-to-adjusted EBITDA of 3.5x-4.5x over the next 12 months. The rating agency also expects EBITDA to continue to benefit from growth in installment loan products. The rating agency could lower the ratings if leverage were to deteriorate to levels above 5x debt to EBITDA.
The rating agency also assigned a B- issue-level rating and 5 recovery rating to Enova's $375 million offering of senior unsecured notes due 2025. The B long-term issuer credit rating on the company was also affirmed.
The 5 recovery rating, according to the rating agency, reflects expectation of a modest 10% recovery in a hypothetical default scenario. The outlook revision is not contingent on the completion of Enova's proposed refinancing.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings document referred to in this news brief can be found here.