S&P lifts Affinion, rates loan CCC+, notes CCC-

S&P said it raised the corporate credit rating on Affinion Group Holdings Inc. to CCC+ from SD (selective default).

The outlook is negative.

The agency also said it assigned a CCC+ rating and 3 recovery rating to Affinion Group Inc.'s new senior secured credit facility, comprising a $110 million revolving credit facility and $1.34 billion term loan.

The 3 recovery rating indicates 50% to 70% expected default recovery.

S&P also said it assigned a CCC- rating and 6 recovery rating to Affinion Group's new $532.6 million payment-in-kind step up notes.

The 6 recovery rating indicates 0 to 10% expected default recovery.

S&P said it also withdrew the ratings on the company's 7 7/8% senior unsecured notes, which were fully repaid following the exchange.

The agency also withdrew its senior secured first-lien $80 million revolver, term loan, senior secured second-lien term loan and senior secured international notes, which were refinanced with the new credit facilities.

S&P said it expects the remaining 13½% senior subordinated notes and 13¾% and 14½% senior unsecured payment-in-kind toggle notes to be exchanged for additional new PIK step-up notes over the next 60 to 90 days.

The agency also said it raised the ratings on these notes to CCC- from D. The recovery rating on these notes is unchanged at 6.

The upgrades follow Affinion's completion of its recent exchange offer on certain senior unsecured notes, which are viewed as a distressed exchange and refinancing of its senior secured credit facilities, S&P said.

The CCC+ corporate credit rating reflects the company's high pro forma adjusted leverage of more than 9.5x and a view that, absent a meaningful improvement in operating performance, the company's capital structure is unsustainable.

The negative outlook indicates that Affinion's capital structure is unsustainable because the company depends on favorable business and economic conditions to grow and manage its high debt leverage, S&P said.

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