S&P downgrades Neustar

S&P said it lowered the corporate credit rating on Neustar Inc. to B+ from BB-.

The agency also said it lowered the ratings on the senior secured term loan and revolver to BB from BB+. The recovery rating on this debt remains at 1, indicating 90% to 100% expected default recovery.

S&P also said it lowered the ratings on the company's unsecured notes to B from B+. The recovery ratings remain at 5, indicating 10% to 30% expected default recovery.

The company has indicated that it expects this debt to be repaid when the transaction closes.

All of the ratings on Neustar remain on CreditWatch, where they were placed with negative implications in June 2016, S&P said.

The downgrades follow news that Neustar signed an agreement to be acquired by Golden Gate Capital for about $2.9 billion, including about $1 billion of Neustar outstanding debt, the agency explained.

The company’s pro forma debt-to-EBITDA ratio could rise to more than 6x depending on EBITDA growth, free operating cash flow generation and debt repayment over the next couple of years, S&P said.

If the transaction is completed, the agency said it believes the company's financial policy will be more aggressive because it will be owned by a private equity owner.

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