S&P rates Scientific Games notes B-

S&P said it assigned a B- rating and 5 recovery rating to Scientific Games Corp.'s proposed $1.1 billion senior unsecured notes due 2026.

The 5 recovery rating indicates 10% to 30% expected default recovery.

The proposed notes will be issued by Scientific Games' direct subsidiary, Scientific Games International, Inc.

The proceeds will be used to redeem about $1 billion of its $2.2 billion of outstanding 10% senior unsecured notes due 2022.

This transaction is modestly credit positive because the new 2026 notes will feature lower interest rates than the redeemed notes, which will improve the company's cash flow and interest coverage, S&P said.

The transaction will improve the company's maturity profile because it extends the maturity of about $1 billion of debt by four years, the agency added.

But the transaction is largely a debt-for-debt refinancing and does not alter the base-case forecast for the company's leverage, S&P noted.

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