S&P cuts Sprint Industrial, loans

Standard & Poor's said it lowered its corporate credit rating on Sprint Industrial Holdings LLC by three notches to CCC from B.

The outlook is negative.

At the same time, the agency lowered its issue-level rating on the company's first-lien term loan to CCC+ from B+. The 2 recovery rating remains unchanged, indicating expectations of substantial (70%-90%; lower end of the range) recovery in the event of a payment default.

In addition, S&P lowered its issue-level rating on Sprint's second-lien term loan to CC from CCC+. The 6 recovery rating remains unchanged, indicating an expectation of negligible (0%-10%) recovery in a default.

"The downgrade reflects our view that it will be difficult for Sprint to remain compliant with its financial covenants if the company does not secure an amendment or waiver in the near-term," S&P credit analyst Sarah Wyeth said in a news release.

"The company's use of debt to fund its elevated capital spending and an acquisition during 2014, combined with weaker-than-expected conditions in its end markets, has increased the likelihood that Sprint will be unable to remain compliant with its covenants."

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