S&P rates Education loan BB

Standard & Poor's said that it assigned Education Management LLC's proposed $1.56 billion senior secured credit facilities BB issue-level ratings and 2 recovery ratings, indicating the expectation of substantial (70% to 90%) recovery for lenders in the event of a payment default.

The outlook is stable.

The proposed credit facilities consist of a $442.5 million revolving credit facility due June 2015 and a $1.12 billion term loan C-2 due June 2016.

Proceeds will be used to refinance outstanding amounts on the company's existing term loan C, with a three-year extension of the maturity.

The rating reflects the company's dependence on federal student loan programs and uncertainty regarding the outcome of proposed government rule changes regarding federal student loan eligibility, balanced by historically robust operating performance and relatively low debt leverage for the rating, S&P said.

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