S&P: Intelsat S. A. Downgraded To 'SD' Following Debt Exchange
At the same time, we lowered the issue-level rating on Intelsat Jackson's 6.625% senior notes due 2022 to 'D' from 'CC' and removed the ratings from CreditWatch negative. The recovery rating is '4', indicating our expectation for average (30%-50%; upper half of the range) recovery for lenders in the event of a payment default. All other issue-level ratings remain unchanged.
"The downgrade follows the close of Intelsat's most recent debt exchange for Intelsat Jackson's 6.625% senior notes due 2022," said S&P Global Ratings credit analyst Rose Askinazi.
We consider the transaction tantamount to a selective default because we view the combination of cash and new securities offered to be less than the original par amount of the notes. In addition, absent the company's current and future subpar debt repayments and ongoing restructuring efforts, we do not believe the existing capital structure is sustainable. As of the early settlement date (Sept. 15, 2016), Intelsat repurchased $141.4 million in face value of its 2022 notes with a combination of cash and newly issued 8% secured notes due 2024. We expect the issue-level rating on this debt to remain 'D', given our expectation that the company will redeem the minimal amount that remains outstanding, around $0.4 million. Separately, Intelsat has received commitments from holders to eliminate substantially all of the restrictive covenants and waive any events of default pertaining to the notes.