S&P: iPayment Inc. Downgraded To 'CCC' On Refinancing Risk; Outlook Negative
We also lowered the issue-level rating to 'CCC+' from 'B' on the company's first-lien credit facilities in accordance with our notching criteria. The recovery rating remains '2', indicating our expectation of substantial (70%-90%; upper half of the range) recovery in the event of default.
In addition, we lowered the issue-level rating on the company's second-lien senior secured notes as well as the senior unsecured notes to 'CC' from 'CCC'. The recovery rating remains '6', indicating our expectation of negligible (0%-10%) recovery in the event of default.
"The rating actions reflect iPayment's significant near-term refinancing risk and relatively subdued recent trend of operating performance, with high leverage, weak liquidity, low free cash flow to debt, and increasing risk of capital structure unsustainability," said S&P Global Ratings credit analyst Peter Bourdon.
The downgrade also reflects our view that the company will default without an unforeseen positive development over the next 12 months.