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, the agency lowered the issue-level rating on the company's $800 million senior secured term loan to B from B+. The 2 recovery rating is unchanged, indicating an expectation for substantial (70%-90%; rounded estimate: 75%) recovery in the event of a default.

S&P said the downgrade reflects the company’s track record of negative free operating cash flow in 2016 and 2017, and an expectation for improving but negative FOCF in 2018 due to limited or no growth in its addressable market.

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