S&P: Neustar Inc. Senior Secured Rating Raised To 'BB+' On Amendment And Extension Of Credit Facility (Recovery Rating: 1)
The amended credit facility consists of a $200 million revolver ($175 million drawn at closing) extended to 2019 from 2018 and an add-on of $300 million to the existing $199 million outstanding term loan A for a new amount of $499 million. The maturity on the term loan A is extended to 2019 from 2018. The revised recovery rating on the amended credit facility reflects higher amortization on the new term loan A of 22% per annum through 2017, and 10% thereafter. As a result, we expect a lower amount of secured debt outstanding at the time of default under our recovery analysis.
We are also raising our issue-level rating on the company's existing $300 million 4.50% senior unsecured notes due 2023 to 'B+' from 'B' and revising the recovery rating on this debt to '5' from '6'. The '5' recovery rating indicates our expectation for modest recovery (10%-30%; lower half of the range) of principal in the event of a payment default. The revised recovery rating reflects a lower amount of secured debt ahead of the existing unsecured notes following the transaction.
Our 'BB-' corporate credit rating and all issue-level ratings remain on CreditWatch with negative implications following the company's June 2016 announcement that it intends to separate into two independent publicly traded companies in a tax-free spin-off.
We anticipate resolving the CreditWatch following additional information being provided by the company such as, required approvals, Neustar's subsequent capital structure, and its ongoing financial policy.
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