S&P downgrades Monitronics

S&P said it lowered its issuer credit rating on Monitronics International Inc. to CCC from B-.

The outlook is negative.

At the same time, the agency lowered its issue-level rating on the $1.1 billion first-lien term loan due 2022 to CCC from B-. The 3 recovery rating is unchanged, indicating an expectation for meaningful recovery (50%-70%; rounded estimate: 65%) in the event of a default.

Additionally, the agency lowered the issue-level rating to CC from CCC on the company's senior unsecured notes. The 6 recovery rating is unchanged, indicating an expectation for negligible recovery (0%-10%; rounded estimate: 0%).

“The downgrade reflects the fact that Monitronics' $585 million senior unsecured notes are due April 1, 2020. However, if the company fails to refinance these unsecured notes by Oct. 1, 2019, the maturity on both the revolving and first-lien term loan will spring forward from current maturities in Sept. 2021 and Sept. 2022, respectively,” S&P said in a news release.

“As a result, without a refinancing or amendment, we view the company's capital structure as unsustainable and believe a distressed exchange is a strong possibility within the next 12 months.”

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