S&P Places Mattress Firm (MFRM) on Review for Possible Downgrade

Standard & Poor's Ratings Services placed all its ratings on Mattress Firm (Nasdaq: MFRM), including the 'B+' corporate credit rating and all issue-level ratings, on CreditWatch with negative implications.

"The CreditWatch placement reflects our view that Mattress Firm's credit metrics could weaken meaningfully pro forma for its acquisition of Sleepy's, given the assumption of certain liabilities totaling about $30 million and additional senior secured debt to finance the transaction," said credit analyst Diya Iyer. "Both Sleepy's and Mattress Firm are currently leveraged in the mid-4x range on a lease-adjusted basis, and we believe this acquisition could push leverage closer to the 6x range."

We expect to resolve the CreditWatch placement on Mattress Firm upon the acquisition's close, at which point we would likely withdraw the ratings on HMK's debt when it is repaid.

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