S&P cuts Morgan Auto notes, rates notes

S&P said it lowered the senior unsecured debt rating of LCM Investments Holdings II LLC (Morgan Automotive Group) to B+ from BB- and assigned a B+ rating to its planned $500 million of senior unsecured notes due 2031. The recovery rating assigned is 5 (10%-30%; rounded estimate: 15%).

“We lowered our rating on its senior unsecured debt to B+ from BB- because of the higher debt quantum in our hypothetical default scenario and revised the recovery rating to 5 from 4, reflecting our view of modest (10%-30%; rounded estimate: 15%) recovery prospects,” S&P said in a press release. The agency also affirmed Morgan’s BB- issuer rating.

Morgan will use the notes to recapitalize its balance sheet. S&P noted Morgan also has a new, unrated $400 million revolver.

The outlook is stable.

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