S&P downgrades iPayment

S&P said it lowered the corporate credit rating on iPayment Inc. to CC from CCC-.

The agency also said it lowered the rating on the company's revolving credit facility and first-lien term loan to CCC from CCC+. The recovery rating remains at 1, indicating 90% to 100% expected default recovery.

S&P also said it lowered the rating on the company's second-lien senior secured notes and senior unsecured notes to C from CC. The recovery rating remains at 6, indicating 0 to 10% expected default recovery.

The outlook is negative.

The downgrades follow news that company's plans to exchange its 9½% second-lien senior secured notes due in 2019 for a combination of cash, common stock and new preferred stock, S&P said.

The agency said it plans to treat the exchange transaction, if completed, as tantamount to a default based on its criteria and given that the investors will receive less value than the original promise of the securities.

The impact of the exchange on the company's credit profile will be assessed upon completion of the exchange, S&P said.

Upon successful completion of the exchange, the agency said it will lower the corporate credit rating to SD (selective default) and the affected issue-level ratings to D, the agency said.

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