S&P: ServiceMaster loan B+

Standard & Poor's said it assigned a B+ senior secured debt rating to the ServiceMaster Co.'s proposed tranche B term loan due January 2017, which the company estimates will be about $1 billion.

The tranche B term loan would extend a portion of its existing $2.5 billion secured term loan facility due in July 2014.

The recovery rating on the secured term loan is 2, indicating 70% to 90% expected recovery in a default.

The agency said it expects this transaction, together with the recently issued $1 billion of 6 1/8% senior unsecured notes to be essentially leverage neutral as the company will use proceeds from both transactions primarily to repay existing debt.

As such, the agency said it estimates the company's debt-to-EBITDA leverage will remain relatively unchanged, which was about 6.5x for the 12 months ended June 30, 2012.

The ratings reflect that the company's financial profile continues to be highly leveraged, particularly because the company's balance sheet remains highly leveraged, the agency said.

S&P also expects cash flow protection measures to continue to be weak.

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