S&P rates Provident notes B

Standard & Poor's said it assigned a B rating with a recovery rating of 5 to Provident Funding Associates LP's issuance of up to $200 million of senior notes due 2019.

The agency also said it revised a recovery rating on Provident's 10¼% senior secured notes due 2017 to 1 from 3 and raised the rating on the notes to BB from B+.

The revision of the recovery rating on the secured notes was driven by an increase in value of the mortgage-servicing rights securing the notes, S&P said.

The agency also said it considered the likely use of the proceeds from the planned senior notes would enable secured creditors to seize and sell Provident at a significantly higher EBITDA level than previously assumed.

S&P said it revised the default scenario by assuming that the secured note holders force a sale of the company before an actual payment default occurs.

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