S&P rates Interface notes B-

Standard & Poor's said it assigned a B- corporate credit rating to Interface Security Systems Holdings Inc., along with a B- rating with a recovery rating of 4 to its $230 million senior secured notes.

The 4 recovery rating indicates 30% to 50% expected average recovery in a recovery default.

Interface Security Systems LLC is a co-issuer to the debt.

The outlook is stable.

The company also plans to issue a $45 million revolving credit facility, which is not rated.

After news of the preliminary transaction terms, Interface upsized its original senior note issuance by $5 million to $230 million, which has minimal impact on credit metrics and no impact on credit rating, outlook or recovery rating, S&P said.

The ratings reflect the company's highly leveraged financial risk profile with expected lease-adjusted pro forma debt-to-EBITDA ratio of about 9x in 2013, said Katarzyna Nolan, an S&P analyst.

The company's vulnerable business risk profile takes into account the company's modest scale, highly competitive industry and concentrated customer base, the agency said.

Positive factors include Interface's growing recurring revenue base, as well as its unique bundled service offering, S&P said.

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