S&P cuts Axtel to SD

Standard & Poor's said it lowered its long-term corporate credit rating on Axtel SAB de CV to SD from CC.

At the same time, the agency affirmed its B issue-level ratings and kept the recovery rating of 2 unchanged on the company's senior secured notes due 2020.

The downgrade follows the company's Dec. 23 announcement that it will exchange $115.5 million of its outstanding 2017 and 2019 senior unsecured notes for senior secured notes due 2020.

"According to our criteria, we view this as a distressed exchange and tantamount to a default, despite the security interest over almost all of Axtel's assets. The offer, in our view, implies that the investor will receive less value than the promise of the original securities; the interest rate for the 2019 notes is lower than the original yield; and the new securities' maturities extend beyond the original maturity date," S&P credit analyst Marcela Duenas said in a news release.

Additionally, the company will add on $36 million to its 2020 notes. These notes, combined with the exchanged notes, will total $146 million.

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