S&P lowers Houghton Mifflin

S&P said it lowered its corporate credit rating on Houghton Mifflin Harcourt Co. to B from B+. The outlook is stable.

At the same time, S&P lowered the issue-level rating on the company's $800 million senior secured term loan to B+ from BB and revised the recovery rating to 2 from 1. The 2 recovery rating indicates an expectation for substantial (70%-90%; lower half of the range) recovery of principal for lenders in the event of a payment default.

“The downgrade reflects HMH's product management and operational missteps, as well as its weak cash flow metrics due to lost market share and a smaller-than-expected addressable U.S. K-12 textbook market in 2016,” said S&P credit analyst Thomas Hartman in a news release.

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