S&P cuts Getty Images, rates notes CCC+

Standard & Poor's said it lowered its corporate credit rating on Getty Images Inc. to SD (selective default) from CC.

At the same time, the agency lowered its issue-level rating on the company's senior unsecured notes to D (default) from CC. The 6 recovery rating is unchanged, indicating an expectation for negligible recovery (0%-10%) of principal in the event of a payment default.

S&P also revised its recovery rating on the company's 10½% first-lien senior secured credit facilities to 4 from 3. The CCC+ issue-level rating remains unchanged. The 4 recovery rating indicates an expectation for average recovery (30%-50%; upper half of the range) of principal in the event of a payment default.

In addition, the agency assigned its CCC+ issue-level and 4 recovery ratings to the company's proposed $252.5 million 10½% first-lien notes due 2020. The 4 recovery rating indicates an expectation for average recovery (30%-50%; upper half of the range) of principal in the event of a payment default.

S&P said the downgrades follow Getty Images' announcement that it completed a debt exchange of $234 million 7% senior unsecured notes due 2020 for $150 million of new 10½% first-lien notes due 2020.

"We view the exchange as tantamount to a default, based on our criteria, because the debtholders are not receiving the originally promised value," S&P credit analyst Elton Cerda said in a news release.

"The revised recovery rating on the existing senior secured credit facility reflects our expectation for dilution in recovery under our simulated default scenario due to the new 10½% first-lien notes."

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