S&P rates IHS loan BB+

Standard & Poor's said it assigned a BB+ rating with a recovery rating of 3 to IHS Inc.'s new $550 million unsecured term loan due 2019.

The 3 recovery rating indicates 50% to 70% expected default recovery.

The proceeds will be used to partially finance the acquisition of Oil Price Information Services LLC for $650 million in cash, S&P said.

The agency also said it affirmed the BB+ rating on the company’s unsecured debt.

In December, IHS acquired Carproof Corp. for C$650 million. Pro forma for both transactions, the agency said it estimates leverage of 3.9x as of Nov. 30, 2015, up from actual leverage of 3x and near the 4x threshold for considering a downgrade.

However, IHS is expected to forgo share repurchases, S&P said, and use cash flow and divestitures proceeds for debt repayment until leverage reaches its 2x- to 3x-target range.

The transaction will result in leverage above the maximum previously allowed by its credit agreement, but the company and its lenders amended the covenant requirements to accommodate the acquisition, the agency said.

The rating reflects a view of the company’s good market positions, high recurring revenue and good track record of operating performance, S&P said.

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