S&P rates McGraw Hill loan B, notes CCC

S&P said it assigned a B rating to McGraw Hill LLC’s proposed $1.4 billion first-lien term loan a B rating with a 2 recovery rating. The agency also gave the company’s planned $800 million of senior secured notes a CCC rating with a 6 recovery rating. S&P also assigned a B- issuer credit rating on McGraw-Hill LLC, operating subsidiary and borrower of the debt facilities.

McGraw-Hill Education Inc. plans to use the proceeds to exchange up to $191 million of its Holdco term loan due 2022 and exchange most of its senior unsecured notes due 2024. The company will also use about $200 million of the proceeds from new investments to pay down and refinance its first-lien term loan due 2022.

S&P also upgraded all its ratings on McGraw-Hill Education to B- from CCC+ because the transaction gives the company additional time to grow into its capital structure.

“The debt burden is significant, but the proposed transaction provides the company with the flexibility to deleverage over the next three years,” the agency said in a press release.

The outlook is stable.

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