S&P rates Zayo loan, notes

Standard & Poor's said it assigned its B issue-level and 4 recovery ratings to Zayo Group LLC's proposed senior secured term loan B due 2016.

In addition, S&P said it raised its issue-level rating on Zayo's $350 million of senior secured notes due 2017 to B from B-. The agency said it revised the recovery rating for these notes to 4 from 5.

S&P said the upgrade is due to a revision in its distressed valuation multiple to 4x from 3x given the company's growth and accumulation of fiber assets which are either owned or under long-term indefeasible rights of use, which the agency believes improves value retention characteristics.

At the same time, S&P said it affirmed the B corporate credit rating on Zayo. The outlook is stable.

"The ratings on Louisville, Colo.-based Zayo Group LLC reflect its highly leveraged capital structure, aggressive acquisition and capital investment strategy, and significant competition among fiber-based bandwidth providers," said S&P credit analyst Naveen Sarma in a news release.

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