S&P ups Entercom notes to B+, view negative

Standard & Poor's said it revised its rating outlook on Entercom Communications Corp. to negative from stable and affirmed its B+ corporate credit rating.

At the same time, the agency revised its recovery rating on the company's senior unsecured notes to 4 from 6 and subsequently raised the issue-level rating to B+ from B-, in accordance with the notching criteria. The 4 recovery rating indicates an expectation for average recovery (30%-50%; lower half of the range) of principal in the event of a payment default.

The ratings on the senior secured debt remain unchanged.

"The outlook revision reflects Entercom's narrow margin of compliance over the next few quarters due to scheduled covenant step-downs in the fourth quarter of 2015 and the first quarter of 2016," S&P credit analyst Heidi Zhang said in a news release.

The company had an 8% EBITDA margin of compliance with respect to its total net leverage covenant as of Sept. 30. The agency believes that the margin of compliance may get as tight as 5% over the next two quarters due to step-downs, despite strong operating performance.

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