S&P downgrades LBI Media

Standard & Poor's said it lowered the corporate credit rating on LBI Media Holdings Inc. to SD (selective default) from CCC.

The downgrade follows news that the company initiated an exchange transaction for about $11 million outstanding of its 11% senior discount notes, said Minesh Patel, an S&P analyst.

Under the agency's criteria, S&P considers debt exchanges of highly leveraged issuers as tantamount to a default.

The exchange transaction is not a significant de-leveraging event, the agency added. S&P said it will reassess the corporate credit rating on further review of the exchange documents and business trends.

A preliminary expectation is that the agency will not raise the corporate credit rating higher than the CCC category following the exchange based on its excessively high debt leverage and discretionary cash flow deficits.

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