S&P Global Ratings downgraded iPayment Inc. to CC from CCC-.

The outlook is negative.

The downgrade reflects the company's announcement that it plans to exchange its 9.5% second-lien senior secured notes due in 2019 for a combination of cash, common stock and new preferred stock. The rating agency would treat the exchange, if completed, as tantamount to a default, given that investors will receive less value than the original promise of the securities.

Upon completion of the exchange, S&P will lower the rating to SD, or selective default.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.