S&P lifts QTS Realty debt to BB-

Standard & Poor's said it raised its issue-level rating on QTS Realty Trust Inc.'s senior unsecured debt to BB- from B+ and revised the recovery rating to 2 from 3.

The 2 recovery rating reflects an expectation for "substantial" (70% to 90%; lower half of the range) recovery for lenders in a payment default. The higher recovery rating reflects an increase in the agency’s net enterprise value due to the closing of QTS' acquisition of cloud and managed services provider Carpathia Hosting Inc.

The $326 million acquisition was funded with proceeds from equity issuances and revolver borrowings. As S&P’s hypothetical default scenario assumes an 85% draw on the revolver at the point of default, the acquisition benefits the company's enterprise value without adding incremental debt.

QTS Realty Trust’s corporate credit rating remains B+ with a stable outlook.

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