S&P Global Ratings on Dec. 15 downgraded the corporate credit rating of iHeartMedia Inc. to selective default, or SD, from CCC.
The rating agency took the action after iHeartMedia revealed its decision not to repay the $57.1 million of senior notes due Dec. 15, held by its affiliate Clear Channel Holdings Inc., upon maturity. S&P expects that, for now, Clear Channel will not pursue remedies in connection with the nonpayment. However, it considers the nonpayment as a default. Further, as iHeartMedia asserted that the unpaid portion of the notes will remain outstanding, the nonpayment will result in delaying the springing lien, granting additional security interests to certain lenders, including its unit iHeartCommunications Inc.'s priority guarantee noteholders.
S&P believes the company's decision of nonpayment does not result from insufficient liquidity. "It appears that the nonpayment is part of iHeartCommunications' larger plan to restructure its obligations, likely through a subpar debt exchange, where the company's debtholders would receive less than the originally promised value."
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.