S&P rates Avaya B, convertibles CCC+

S&P said it assigned its B corporate credit rating to Avaya Holdings Corp.

The outlook is stable.

The B issue-level and 3 recovery ratings are unchanged on Avaya Inc.'s repriced $2.918 billion first-lien term loan due 2024. The 3 recovery rating continues to indicate an expectation of meaningful (50% to 70%; rounded estimate 50%) recovery in the event of a default.

The agency also assigned a CCC+ issue-level rating to Avaya Holdings’ proposed $300 million senior unsecured convertible notes, which may potentially have a $50 million greenshoe. The 6 recovery rating indicates negligible (0% to 10%; rounded estimate 0%) recovery.

S&P said that although the proposed issuance of the convertible notes will increase gross debt, it expects adjusted leverage to remain below the 7x area over the next 12 months, the current downside scenario.

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