S&P Upgrades AMC Entertainment Credit Rating: What Investors Need To Know

AMC Entertainment Holdings, Inc. AMC shares are advancing Friday, reversing some of the previous two session's losses.

What Happened: AMC's credit rating received a two-notch upgrade from S&P Global Ratings, premised on the view that there is now "a path to a sustainable capital structure."

This, according to S&P, is a possibility If the theater chain prudently deploys its recently raised capital to pay off debt and refinance expensive debt raised during the pandemic. The company may also receive support from improved attendance.

The rating has been raised from CCC- to CCC+.

Related Link: Why This AMC Entertainment Analyst Says Share Price 'Out Of Touch' With Fundamentals

Notwithstanding the recent upgrade, AMC's debt rating is still in junk bond territory, suggesting the company's debt is not investment-worthy.

S&P also left open the possibility of further upgrades if the anticipated progress materializes.

Why It's Important: An improved credit rating allows companies to raise finances on more favorable terms.

AMC's shares, which have been highly volatile this year due to frenzied retail interest, skyrocketed to an all-time high of $72.62 in early June. The shares have since then come off notably from the level.

At last check, AMC shares were up 0.4% at $42.98. 

Related Link: Mudrick Capital Cashes Out Of 'Overvalued' AMC Entertainment Investment Just Hours After Buying In: Report

Photo courtesy of AMC.