S&P cuts iPayment to CCC-

S&P said it lowered its corporate credit rating on iPayment Inc. to CCC- from CCC.

The outlook is negative.

The agency also reviewed the recovery and issue-level ratings for the company that were under criteria observation (UCO) after publishing its revised recovery ratings criteria on Dec. 7. With the criteria review complete, we the agency removed the UCO designation from these ratings and affirmed the CCC+ issue-level rating on the first-lien credit facility and revised the recovery rating to 1 from 2.

In addition, S&P affirmed the CC issue-level rating on the company's second-lien senior secured notes and senior unsecured notes. The recovery rating remains 6, indicating an expectation of negligible (0-10%) recovery in the event of default.

S&P said the actions reflect iPayment's significant near-term refinancing risk driven by high leverage, weak liquidity and increasing risk of capital structure unsustainability. Despite a debt restructuring in 2014, iPayment remains highly leveraged with weak free cash flow to debt.

The downgrade reflects the agency’s view that the company will default without an unforeseen positive development over the next six months.

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