S&P: Sophia to negative, rates loan B+, notes CCC+

Standard & Poor’s said it revised the outlook on Sophia LP to negative from stable and affirmed the B corporate credit rating on the company.

The agency also said it assigned a B+ rating and 2 recovery rating to the company’s proposed $150 million revolving credit facility and proposed $1.46 billion term loan B.

The 2 recovery rating indicates 70% to 90% expected default recovery.

S&P also said it assigned a CCC+ rating and 6 recovery rating to the company’s proposed $590 million unsecured notes. The 6 recovery rating indicates 0 to 10% expected default recovery.

The outlook revision reflects the company’s pro forma adjusted leverage in the mid-8x range, the agency said.

The ratings also reflect the company’s fair business risk profile, characterized by its heavy exposure to the U.S. higher-education market and competition with other well-capitalized companies in selected domains, S&P said.

Sophia’s highly leveraged financial risk profile incorporates a view that leverage is likely to stay at more than 8x through most of 2016, the agency said.

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