S&P lowers Intelsat, notes

S&P said it lowered its corporate credit rating on Intelsat SA to SD from CCC+.

At the same time, the agency lowered its issue-level rating on Intelsat Luxembourg SA's 7¾% senior notes due 2021 to D from CCC-.

S&P said it expects that the issue-level rating will remain at D because the debt could be subject to further subpar repurchases.

The agency said the downgrade follows Intelsat's repurchase of around $600 million of subsidiary Intelsat Luxembourg’s 7¾% senior notes due 2021 at a discount to par, which S&P views as tantamount to a default under its criteria because the lenders received less value than they were originally promised.

“We expect that Intelsat's leverage will remain elevated in the mid-8x area on modest EBITDA growth over the next few years and minimal free operating cash flow relative to its heavy debt burden of about $14 billion,” S&P said in a news release.

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