S&P Global Ratings upgraded Somnigroup International Inc.'s long-term corporate credit rating to 'BB+' from 'BB' on Friday, citing reduced leverage and improved financial flexibility. The agency also raised issue-level ratings on the company's senior notes to 'BB+' from 'BB', while maintaining a '4' recovery rating. The $1.5 billion senior secured term loan B received an affirmed 'BBB-' rating.
The upgrade follows Somnigroup's deleveraging efforts, with S&P-adjusted leverage declining to 3.5x for the 12 months ended June 30, 2026, down from a pro forma 3.8x post-Mattress Firm acquisition. S&P forecasts adjusted leverage will further decrease to approximately 3.2x in fiscal 2026, with a potential rating increase if leverage remains below 4x. Adjusted EBITDA expanded over 15% year-over-year.
Somnigroup reported a 3% sales decline in Q2 2026, with U.S. bedding category unit volume declining in the mid- to high-single-digit percent range. Despite this, S&P projects full-year fiscal 2026 sales growth of about 2%. The company's brands and private-label products are expected to account for the mid-60% of Mattress Firm's 2026 sales, up from the low-50% range preacquisition.
In July 2026, Somnigroup amended its credit facilities, adding a $1.7 billion revolving credit line and a $1.2 billion term loan A, extending maturities to 2031 and providing $700 million of incremental liquidity. The additional funds were used to repay part of the outstanding term loan B, reducing annual interest expense by roughly $5 million.
S&P assigned a positive outlook to the rating, reflecting expectations of sustained leverage reduction and EBITDA growth. The agency also noted the company's planned all-stock acquisition of Leggett & Platt, valued at approximately $2.5 billion and expected to close in Q3 2026 pending regulatory approvals. The transaction is viewed as leverage-neutral, with the combined entity projected to generate pro forma sales of about $11 billion and adjusted EBITDA of roughly $2 billion.
