S&P rates WMG notes BB-, B-

Standard & Poor's said it affirmed the B+ corporate credit rating on Warner Music Group Corp. and removed all ratings from CreditWatch, where they were placed with negative implications on May 6.

The outlook is stable.

S&P assigned a BB- issue-level rating on WMG Acquisition Corp.'s $150 million of 9½% senior secured notes. The recovery rating on the senior secured debt is 2, indicating substantial (70% to 90%) recovery for noteholders in the event of a payment default.

S&P assigned a B- issue-level rating to WMG Acquisition's proposed $695 million of senior unsecured notes due 2018, with a recovery rating of 6, indicating expectation of negligible (0% to 10%) recovery for noteholders in the event of a payment default.

S&P also assigned a B- issue-level rating to WMG Holding Corp.'s proposed $200 million of senior unsecured holdco notes due 2019, with a recovery rating of 6, indicating negligible (0% to 10%) recovery for noteholders in the event of a payment default.

The ratings reflect continued uncertainty surrounding revenue and profitability trends at WMG over the intermediate term, despite the U.S. music industry showing stabilizing signs in the first half of 2011, the agency said.

The ratings also reflect the expectation of continued high leverage following the proposed transaction as well as the company's weak business risk profile, the agency added.

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