S&P lifts CNG Holdings to CCC

S&P said it raised the long-term issuer credit rating on CNG Holdings Inc. to CCC from SD (selective default).

The outlook is negative.

The D (default) rating and 5 recovery rating on the senior secured notes are unchanged. A 5 recovery rating indicates10% to 30% expected default recovery.

The ratings reflect CNG's significant exposure to adverse regulatory changes and its growing vulnerability to Sears Holdings Corp. for its lease finance operations, S&P said.

For the next 12 months, the agency said it expects negative market dynamics within the payday industry to persist as volumes and earnings related to short-term lending will remain suppressed.

The company may continue to contemplate opportunities to restructure its balance sheet to offset adverse operational pressures, S&P said.

On Aug. 2, CNG announced that it repurchased $68.9 million of its senior secured notes in a privately negotiated transaction, which was viewed as tantamount to default because the purchase price was executed substantially below par.

The company facilitated the repurchase through a new first priority credit facility containing a $25 million revolving line of credit and $100 million term loan, S&P said.

The rating on the company's senior notes remains unchanged at D because the agency said it believes the company will continue to repurchase additional notes or execute other restructuring transactions viewed as distressed, the agency added.

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