S&P rates Frontier Communications loans B+, notes B-, CCC+

S&P said it assigned preliminary ratings to Frontier Communications Corp. and its proposed exit financing, including assigning a preliminary B- issuer credit rating.

S&P also assigned a preliminary B+ issue-level rating and 1 recovery rating to the new senior secured exit facilities, which will consist of a $625 million superpriority debtor-in-possession to exit revolving credit facility, $500 million superpriority DIP-to-exit term loan B, $1.15 billion of superpriority DIP-to-exit first-lien notes, and the existing $1.7 billion senior secured term loan B. The 1 recovery rating indicates an expectation for very high (90%-100%; rounded estimate: 95%) recovery in the event of payment default.

At the same time, S&P assigned a preliminary B- issue-level rating and 4 recovery rating to the existing $1.6 billion second-lien notes. The 4 recovery rating indicates an expectation for average (30%-50%; rounded estimate: 35%) recovery in the event of payment default.

S&P also assigned a preliminary CCC+ issue-level rating and 5 recovery rating to the $750 million of takeback notes (which will be secured on junior-lien basis or unsecured pursuant to the plan of reorganization). The 5 recovery rating indicates an expectation for modest (10%-30%; rounded estimate: 10%) recovery in the event of payment default.

“These ratings contemplate the company's emergence from Chapter 11 bankruptcy in early 2021 in accordance with its court-approved plan of reorganization and reflect the ratings we would expect to assign to the company and its debt obligations at such time,” S&P said in a news release.

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