S&P cuts Cincinnati Bell

S&P said it lowered its ratings for Cincinnati Bell Inc. and its senior secured debt to B- from B and B+, respectively. S&P also revised the recovery rating on the debt to 3 from 2.

“The downgrade reflects our expectation for lower EBITDA and higher capital expenditures (capex), which will result in higher leverage in 2023. Cincinnati Bell's earnings during the first quarter of 2023 were lower than our expectations, with EBITDA declining about 13% year over year as modest single-digit percent growth in IT services and network were offset by higher employee expenses and higher costs associated with the expansion of its fiber build. We now expect a 5% decline in EBITDA compared with growth of about 4% in our previous forecast,” the agency said in a press release.

The two-notch downgrade for the secured loans and notes reflects the recent $200 million incremental term loan, S&P said. The 3 recovery rating indicates meaningful (50%-70%) recovery in default.

The agency said it does see Cincinnati Bell’s earnings improving in 2024.

The outlook is stable.

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