S&P cuts Veracode secured debt to B-, rates revolver BB-

S&P said it lowered the issue-level rating on Veracode Parent LP’s proposed new $815 million first-lien term loan to B- and revised the recovery rating to 3 from 2, reflecting the absence of second-lien debt in the capital structure and decreasing cushion supporting the first-lien debt in an event of a default.

The 3 recovery rating reflects an expectation of meaningful (50%-70%; rounded estimate: 50%) recovery in a payment default.

At the same time, S&P said it raised the issue-level rating on the firm's proposed new $75 million revolver, which will now have super-priority claim status, to BB- and revised the recovery rating to 1+. The 1+ recovery rating reflects an expectation of full recovery (100%) in a payment default.

Veracode Parent announced that it plans to upsize the first-lien debt issuance to fund TA Associates Management LP's majority investment in the company by $235 million, while removing the $235 million second-lien term loan from the previously proposed capital structure.

“The total quantity of debt involved in the financing of the acquisition is unchanged and the shift of $235 million to first-lien debt from second-lien debt does not materially impact the company's credit metrics, thus our B- corporate credit rating and stable outlook on Veracode are unchanged,” S&P said in a news release.

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