S&P rates iHeartCommunications notes BB-

S&P said it assigned a BB- rating with a 2 recovery rating to iHeartCommunications Inc.’s proposed offering of $500 million senior secured notes due in 2028. The 2 recovery rating indicates S&P’s expectation for substantial (70%-90%; rounded estimate: 75%) recovery for lenders in the event of a payment default.

Proceeds will be used by parent iHeartMedia Inc. to repay a portion of its $3.5 billion senior secured term loan B ($2.75 billion outstanding) maturing in 2026.

“We expect the transaction to reduce iHeartMedia’s annual interest expense by around $5 million,” said S&P in a press release.

“Our B+ issuer credit rating and stable outlook on iHeartMedia are unchanged because the proposed transaction will not affect net leverage. We continue to expect net leverage to approach 5x over the next 12 months due to a combination of voluntary debt repayment and EBITDA growth in the low-single-digit percent area, supported by modest revenue growth and cost-saving initiatives,” said S&P in a press release.

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