Below are excerpts from recently published ratings actions on a selection of companies, including those within Reorg's coverage universe as well as certain leveraged loan borrowers not yet under coverage.
Cumulus Media Inc.
Ratings Alert: Cumulus Media Inc. Upgraded To ‘B-’ From ‘SD’ Following Maturity Extension; Outlook Stable; New Debt Rated
The following is taken from a ratings update by S&P. The origins can be viewed HERE.
- Cumulus Media Inc. recently completed a debt restructuring that extended the majority of its debt maturities to 2029 and reduced its amount of debt outstanding by about $30 million.
- The transaction reduces near-term refinancing risk and provides Cumulus with runway to focus on its digital growth and use cash to pay down debt.
- Therefore, we raised our issuer credit rating on Cumulus to 'B-' from 'SD' (selective default).
- We also raised our issue-level rating on the company's previously existing senior secured notes due 2026 and senior secured term loan due 2026 to 'CCC' from 'D' and revised our recovery ratings on these debt facilities to '6' from '2'.
- We also assigned our 'B-' issue-level rating and '3' recovery rating to the company's new senior secured notes due 2029 and new senior secured term loan due 2029.
- The stable outlook reflects our expectation that Cumulus will maintain adequate liquidity and use its positive free operating cash flow (FOCF) to continue reducing its outstanding debt. This is despite our forecast that the company's S&P Global Ratings-adjusted gross leverage will remain elevated at 7.9x in 2024 because the rise in its digital advertising will be largely offset by secular declines in broadcast radio advertising.
NEW YORK (S&P Global Ratings) May 13, 2024—S&P Global Ratings today took the rating actions listed above.
Spirit Airlines Inc.
Ratings Alert: Fitch Downgrades Spirit Airlines' Class B Certificates to 'B+'
The following summary was generated with help from Reorg’s proprietary AI models. The original Fitch ratings update can be viewed HERE.
In a recent move, Fitch Ratings downgraded Spirit Airlines' 2017-1 class B certificates from 'BB' to 'B+'. This downgrade is linked to Fitch's previous downgrade of Spirit's Issuer Default Rating (IDR) from 'B-' to 'CCC'. However, the ratings of the 2017-1 class AA certificates have been affirmed at 'A+', and the class A certificates for both the 2017-1 and 2015-1 transactions have been maintained at 'A'.
The downgrade reflects the changes in Spirit's financial stability. The class B certificates, which are notched off the underlying airline rating, could face further downgrade if Spirit enters bankruptcy. However, the class AA and A certificate ratings continue to be supported by robust collateral coverage.
The ratings for the class A certificates are derived using Fitch's top-down approach. Despite a slight increase in Loan-to-Values (LTVs) since the last review, they maintain a moderate level of cushion at the current rating category. They also benefit from strong levels of overcollateralization with LTVs at 84.9% for the 2015-1 certificates and 91.6% for the 2017-1 certificates.
Telesat Corp.
Ratings Alert: Moody's Ratings appends limited default (LD) designation to Telesat's Caa2-PD rating following discounted debt repurchases
The following summary was generated with help from Reorg’s proprietary AI models. The original Moody's ratings update can be viewed HERE.
Moody's Ratings has added an "/LD" designation to Telesat Corporation's Caa2-PD probability of default rating, indicating a limited default resulting from discounted debt repurchases. This move comes after Telesat's announcement that it repurchased debt worth $219.5 million for $98.9 million, on top of $587 million of debt repurchased in 2022 and 2023. Despite these repurchases improving Telesat's capital structure, Moody's views them as a distressed exchange, constituting a default event under its definition.
However, Telesat's corporate family rating, probability of default rating, and speculative grade liquidity, as well as the ratings for its main operating subsidiary, Telesat Canada, remain unchanged. The outlook for both entities also remains stable.
In 2023, Telesat announced it had secured full funding for its 156 low earth orbit satellite constellation, Telesat Lightspeed, with support from the Canadian government and certain provincial governments. Despite this positive development, Moody's expects a continued EBITDA decline in Telesat's geosynchronous satellite business.
Cincinnati Bell, Inc.
Ratings Alert: Fitch Affirms Cincinnati Bell's Long-Term IDR at 'B'; Outlook Stable
The following summary was generated with help from Reorg’s proprietary AI models. The original Fitch ratings update can be viewed HERE.
Fitch Ratings has confirmed the Long-Term Issuer Default Ratings of Cincinnati Bell Inc. (CBB) and its subsidiary Cincinnati Bell Telephone Company LLC (CBT) at 'B' while downgrading their first-lien senior secured debt to 'B+'/'RR3' from 'BB-'/'RR2'. The ratings reflect Fitch's prediction that CBB will continue to invest heavily in its fiber network, which will weaken credit metrics but remain within Fitch's EBITDA leverage sensitivities of 4.5x to 5.5x.
Fitch expects CBB to generate free cash flow (FCF) deficits averaging near $300 million annually due to increasing capital expenditure (capex) and related spending to fund its fiber rollout.
Fitch anticipates an increase in leverage as the company will need additional debt financing to fund its fiber build-out.CBB's aggressive fiber deployment plans in Hawaii and Dayton carry a higher degree of execution risk, which is offset by the company's subsidized fiber build project in Cincinnati and Hawaii. CBB's limited geographic footprint could impact the company's operating profile more significantly than peers with a larger footprint in the event of significant events affecting its key geographies.
Strathcona Resources Ltd.
Ratings Alert: Strathcona Resources Ltd. Outlook Revised To Positive On Increased Scale, Improving Liquidity; ‘B+’ Rating Affirmed
The following is taken from a ratings update by S&P. The original can be viewed HERE.
- Strathcona Resources Ltd. has steadily increased its production scale, exiting 2023 with 186,000 barrels of oil equivalent (boe) per day of production and net proved reserves of 1.15 billion boe, which enhances the company's credit profile, in our view.
- At the same time, the company repaid the outstanding amounts under the term loan facility, alleviating associated refinancing risk. Based on projected free cash flows and recent upsizing of the credit facility to 2.5 billion Canadian dollars, we believe the company will maintain sufficient liquidity over our forecast period.
- Accordingly, we revised the outlook to positive from negative.
- We also affirmed our 'B+' issuer credit rating on Strathcona and 'BB-' issue-level rating on the senior unsecured notes. The '2' recovery rating on the senior unsecured notes remain unchanged.
- The positive outlook reflects the potential for an upgrade if the company continues to demonstrate consistent operating performance at current production levels and lowers borrowings under the credit facility.
S&P Global Ratings on May 13 took the rating actions listed above. We believe Strathcona's production scale and reserves base is comparable with that of higher-rated peers, underpinning the rating action.
Strathcona Resources Ltd. is an oil and gas producer headquartered in Calgary, Alberta.
Goodnight Water Solutions
Ratings Alert: Goodnight Water Solutions Holdings LLC Rated 'B', Senior Secured Debt Rated 'B+' (Recovery Rating: '2'); Outlook Stable
The following is taken from a ratings update by S&P. The original can be viewed HERE.
- Texas-based Goodnight Water Solutions Holdings LLC (Goodnight), a water logistics company, is issuing a $400 million senior secured term loan B (TLB) maturing in 2029 to refinance its existing capital structure.
- S&P Global Ratings assigned its 'B' issuer credit rating (ICR) to Goodnight, and its 'B+' issue-level rating to the proposed TLB. The '2' recovery rating on the TLB indicates our expectation of substantial (70%-90%; rounded estimate: 70%) recovery in the event of a payment default.
- The stable outlook reflects our expectation that Goodnight will continue to increase its throughput volumes and EBITDA, while reducing its S&P Global Ratings-adjusted leverage to about 3.4x in 2024 and 2.7x in 2025.
TORONTO (S&P Global Ratings) May 13, 2024—S&P Global Ratings today took the rating actions listed above.
Goodnight's $400 million five-year TLB will refinance its existing capital structure and will be leverage neutral. The company is seeking to refinance its existing superpriority revolver and Wilmington trust notes with a new $400 million TLB due 2029. The existing $100 million superpriority revolver will be replaced by a new $30 million (undrawn at closing) three-year revolver ranking pari passu with the $400 million TLB. The proposed capital structure will result in pro forma financial leverage of about 3.4x at year-end 2024 and includes a 100% excess cash flow sweep that steps down to 75% at 3.5x net leverage, 50% at 3.0x, 25% at 2.5x, and 0% at 2.0x.
EIG Global Energy Partners
Ratings Alert: EIG Management Co. LLC’s New $200 Million Term Loan B Due 2029 Rated 'BB' (Recovery Rating: '4')
The following is taken from a ratings update by S&P’s.The original can be viewed HERE.
NEW YORK (S&P Global Ratings) May 13, 2024--S&P Global Ratings today assigned its 'BB' issue-level rating and '4' recovery rating to EIG Management Co. LLC's new $200 million term loan B due 2029. The '4' recovery rating indicates our expectation of average (rounded estimate: 45%) recovery of principal in the event of a default. The company will use the proceeds from the new term loan, along with a $7 million prepayment at close, to repay its existing $207 million term loan B due 2025. EIG also plans to extend its $25 million credit facility to 2027 from 2024.
Our 'BB' issuer credit rating and stable outlook on EIG Management Company are unaffected by this refinancing transaction, as it is leverage neutral. EIG ended 2023 with S&P Global Ratings-adjusted gross leverage of 3.0x and we expect it will maintain weighted leverage (20% for 2023, 40% for 2024 and 40% for 2024) of 2.5x-3.5x over the next 12 months while assets under management (AUM) and earnings remain stable. Our downside for the ratings remains at 3.5x.