S&P rates Virgin Australia notes B

S&P said it assigned a B rating to Virgin Australia Holdings Ltd.'s A$250 million five-year senior unsecured notes issued under the airline's medium-term note program.

The agency also said it assigned a recovery rating of 5 to the notes.

The proceeds will be used to refinance part of the company's upcoming $400 million senior unsecured notes due in November 2019.

The rating is one notch lower than the issuer credit rating, indicating 10% to 30% expected default recovery.

This reflects the group's highly encumbered asset base and capital-light business model, S&P explained.

The agency also acknowledged that Virgin is accumulating unencumbered physical assets, which may improve senior unsecured recovery prospects over time.

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