S&P cuts Citadel Broadcasting

Standard & Poor's said that it lowered its corporate credit rating on Citadel Broadcasting Corp. to CCC+ from B+.

The outlook is negative.

At the same time, the agency said it lowered its issue-level rating on Citadel's senior secured credit facilities to CCC+, which is at the same level as the corporate credit rating, from B+.

In addition, the agency said it revised the recovery rating on this debt to 4, indicating its expectation of average recovery in a payment default, from 3.

"The ratings downgrade reflects its concern that Citadel could violate its 8.5x leverage covenant as early as first-quarter 2009, due to the deepening recession and deterioration in radio advertising demand," said S&P credit analyst Michael Altberg.

"The downgrade also incorporates its view that Citadel may not be able to absorb a potentially significant increase in interest rates, which could accompany an amendment in the current credit environment."

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