S&P Global upgraded arts-and-crafts chain Michaels to a B rating from B- on Monday. "The upgrade reflects Michaels' good operating performance and recent debt reduction efforts," said S&P.
S&P pointed to sales that ran ahead of its forecast over the opening half of the fiscal year and to debt paydowns. It also noted that applying tariff refunds toward debt trimmed sales costs by $151 million and that leverage has improved to 4.3x compared with 5.4x a year earlier. S&P expects revamped retailing strategies to keep growth moving. The agency also lifted its views on the company's debt structure, moving first-lien notes to B and second-lien notes to CCC+.
Michaels' bonds, which sank to about 34 cents per dollar last year, now trade near par. Bloomberg data indicated that on Monday both notes were priced at about 98 cents per dollar, roughly a penny less than the week before. In its report, S&P cautioned that Apollo's ownership "increases the risk of a future leveraging event." It also flagged the chance that consumers pull back on spending and highlighted Michaels' exposure to Chinese imports and to shipping costs that move with tariffs and fuel prices.
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Since Apollo Global Management Inc. acquired Michaels five years ago, the retailer has refreshed stores, broadened its assortment, and named David Boone chief executive in 2025. The turnaround has Apollo exploring an IPO for the 53-year-old company, Bloomberg previously reported. If you watch corporate credit for clues, the shift from distressed bond levels to nearly par, alongside a higher S&P rating, is a real-time read on improving fundamentals rather than market hype.
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