S&P rates Deluxe notes B

Standard & Poor's said it assigned Deluxe Entertainment Services Group Inc.'s proposed $600 million senior secured notes due 2017 its issue-level rating of B and assigned the proposed notes a recovery rating of 4, indicating S&P's expectation of modest (30% to 50%) recovery for noteholders in the event of a payment default.

Proceeds of the notes will be used to refinance the company's existing first-lien and second-lien credit facilities.

If the company increases the size of the notes offering to an amount greater than $600 million, S&P said it would likely lower the rating of the notes to B- with a recovery rating of 5, indicating S&P's expectation of modest (10% to 30%) recovery for noteholders.

At the same time, S&P placed its B- corporate credit rating for Deluxe on CreditWatch with positive implications.

"The CreditWatch placement of the corporate credit rating reflects the benefits for covenant compliance and liquidity that would result from the refinancing of the senior secured credit facilities with the proposed senior notes," explained S&P credit analyst Tulip Lim in a news release.

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