S&P cuts Spanish Broadcasting, notes to CCC-

S&P said it lowered its corporate credit rating on Spanish Broadcasting System Inc. (SBS) to CCC- from CCC.

The outlook is negative.

At the same time, the agency downgraded the issue-level ratings on the company's 12½% senior secured notes due April 2017 to CCC- from CCC. The 3 recovery rating is unchanged, indicating an expectation for meaningful recovery (50%-70%; upper half of the range) of principal in the event of a payment default.

"The downgrade reflects our view that it's unlikely that SBS was able to raise enough proceeds from the recent spectrum auction to repay its 12½% notes due April 2017," S&P credit analyst Scott Zari said in a news release.

"As a result, we believe SBS faces near-term default risk due to its high leverage and inability to incur new debt."

If the company is unable to amend this debt incurrence restriction and refinance the 12½% notes, the agency said it believes it will face a payment default in April 2017 when the notes are due.

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