S&P ups Postmedia notes

Standard & Poor's said it raised the issue-level rating on Postmedia Network Inc.'s $275 million of second-lien secured notes due 2018 to B from B-. S&P revised the recovery rating on the notes to 5 from 6, indicating the expectation of a modest (10%-30%) recovery in the event of default.

S&P affirmed the B+ long-term corporate credit rating on Postmedia as well as the BB issue-level rating on the company's first-lien debt. The 1 recovery rating on first-lien debt is unchanged.

The outlook is negative.

These rating actions reflect the improved recovery prospects for the second-lien notes, the agency said. This improvement follows Postmedia's repayment of a material amount of first-lien bank debt, including the repayment of more than C$40 million on its C$300 million U.S. term loan since July 2010.

The ratings reflect S&P's assessment of the company's weak business risk profile as reflected in the company's participation in the challenging newspaper publishing industry, which is characterized by declining advertising and circulation revenues, electronic substitution and pricing pressures, the agency said.

The ratings also consider the company's good market position, solid credit protection measures for the ratings and improved profitability because of cost-cutting efforts, the agency added.

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