S&P elevates Cell C, rates secured notes B

S&P said it raised its long-term corporate credit rating on Cell C (Pty) Ltd. to B- from D (default). The outlook is negative.

At the same time, S&P assigned a B issue rating to the new senior secured notes due 2020 issued by Cell C Proprietary Ltd. The recovery rating on the new debt is 2, reflecting an expectation of substantial recovery (70%-90%; rounded estimate 85%) in the event of a payment default.

S&P has also withdrawn its D issue rating and 4 recovery rating on Cell C's €400 million bonds, since this debt has been repaid with proceeds from the equity contribution and the debt issuance.

“The upgrade reflects Cell C's significant debt reduction, material decrease in currency risk on its debt, adequate liquidity, and good operating performance over the last year, despite financial constraints while in default. These factors, along with Cell C's adjusted leverage ratio of about 3.3x, are typical of companies we rate B or B+,” S&P said in a news release.

“However, despite Cell C's recent default and restructuring, we continue to expect it will generate negative cash flows for at least the next two years.”

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