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S&P cuts Marriott secured debt, ups notes
S&P said it lowered its issue-level rating on Marriott Vacations Worldwide Corp.'s secured debt issued by wholly owned subsidiary Marriott Ownership Resorts Inc. to BB+ from BBB- and revised the recovery rating to 2 from 1.
The recovery rating indicates an expectation for substantial (70% to 90%; rounded estimate: 85%) recovery in the event of default.
The agency removed the rating from CreditWatch, where it was placed with negative implications on Aug. 8.
At the same time, S&P raised the issue-level rating on Marriott Ownership's 5 7/8% unsecured exchange notes and Marriott Ownership’s and ILG LLC's 6¼% unsecured notes to BB from BB-, and revised the recovery rating to 4 from 5, reflecting average (30% to 50%; rounded estimate: 35%) recovery.
In addition, the agency raised the issue-level rating on Interval Acquisition Corp.'s unsecured notes due 2023 to BB from BB- and revised the recovery rating to 4 (rounded estimate: 35%) from 6.
The agency also removed the issue-level ratings from CreditWatch.
“The unsecured debt rating upgrade to BB from BB- and secured debt rating downgrade to BB+ from BBB- reflect the change in recovery prospects following MVW's completion of its exchange offer for ILG notes on Sept. 4, 2018 and the completion of its subsequent change of control offer for the same notes on Oct. 19, 2018,” S&P said in a news release.
“The company was unable to successfully exchange more than 50% of the notes through the exchange offer.
“Even though more than 50% of the notes were ultimately retired through the subsequent change of control offer, ILG's covenants will remain in place, including a liens test that limits the amount of collateral that can be pledged to secured debt.”
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