OREANDA-NEWS. S&P Global Ratings today assigned its 'BB-' issue ratings with a '3' recovery rating to the proposed €750 million senior secured term loan to be issued by Ziggo Secured Finance B. V. and the $750 million senior secured term loan to be issued by Ziggo Secured Finance Partnership. These companies are orphan special-purpose vehicles (SPV) under Ziggo Group Holding B. V. (BB-/Stable/--). Ziggo is a Netherlands-based provider of TV, broadband internet, fixed-line telephony, and mobile services.

The new term loans, maturing in August 2024, will be used to refinance the remaining €664 million term loan maturing in 2021 issued by Ziggo Secured Finance B. V. and part of the remaining $4 billion term loans maturing in 2022 issued by Ziggo B. V. The transaction will have a neutral impact on leverage. It is part of the stated refinancing strategy of Ziggo's parent Liberty Global to lengthen the maturity of debts across Liberty Global's subsidiaries.

In our view, the Ziggo SPVs, including Ziggo Bond Finance B. V., meet the following conditions:All of their debt obligations are backed by equivalent-ranking obligations with equivalent payment terms issued by the Ziggo group (the proceed loans);The SPVs are strategic financing entities for Ziggo set up solely to raise debt on behalf of the group; andWe believe Ziggo is willing and able to support the SPVs to ensure full and timely payment of interest and principal when due on the debt issued by the SPVs, including payment of any of the SPV's expenses. Hence, we rate the debt issued by these SPVs at the same level as we rate equivalent-ranking debt of Ziggo and treat the contractual obligations of the SPVs as financial obligations of Ziggo.

We affirmed our existing 'BB-' issue rating with a recovery rating of '3' on the group's senior secured debt. We have also affirmed our 'B' issue rating with a recovery rating of '6' on the group's unsecured notes, reflecting their structural and contractual subordination to the senior secured debt.

Our hypothetical default scenario assumes increased product and pricing competition from Internet protocol TV and fiber broadband products leading to increased customer churn and subscriber acquisition and retention costs. This would be further exacerbated by an inability to increase prices. We value Ziggo as a going concern given its valuable cable network and customer base.

Simulated default and valuation assumptions:Year of default: 2020Stresses EBITDA: €770 millionImplied EBITDA multiple: 5.75xJurisdiction: The NetherlandsSimplified waterfall:Gross enterprise value at default: €4,420 millionAdministrative costs: €310 millionNet value available to creditors: €4,110 millionPriority claims: €215 millionFirst-lien debt claims: €6,460 million*--Recovery expectation: 50%-70% (higher half of the range)Second-lien debt claims: €1,550 million*--Recovery expectation: 0%-10%*All debt amounts include six months' prepetition interest.