Bonds backing Fresh Market Inc. edged higher this afternoon after S&P Global Ratings cited the bonds' improved performance as one of the reasons for the issuer's rating upgrade to B-, from CCC+.

The company's 9.75% senior secured notes due May 2023 gained a quarter of a point to trade at 102.875, down from December highs of 103.25 but well above their March nadir of 42.5. The agency noted the improved performance of the bonds as evidence that the company's refinancing prospects have improved and the risk of a below-par restructuring has diminished. The notes have traded above par since Nov. 30, 2020.

Fresh Market reported significant improvement in operating performance and free cash flow in 2020 as a result of increased demand for fresh food for at-home consumption. S&P Global Ratings said today it expects that outperformance to continue as newly implemented strategic initiatives resonate with the Apollo-controlled grocery retailer's generally older-demographic customers.

S&P Global Ratings forecasts adjusted debt to EBITDA in the high-4x area in fiscal 2020, moderating to the mid-5x area in 2021. The stable outlook reflects the agency's expectation that, despite some expected performance moderation in 2021, Fresh Market will continue to generate more consistent income and cash flow, resulting in a more stable capital structure.