S&P revises Liberty unsecured recovery rating

Standard & Poor’s said it revised the recovery rating on Liberty Interactive LLC’s unsecured debentures to 3 from 4.

The BB rating on the debentures is unchanged. The 3 recovery rating indicates 50% to 70% expected default recovery.

The outlook revision follows the improved market value for equity investment holdings, S&P said.

Liberty Interactive is a subsidiary of Liberty Interactive Corp.

Liberty Interactive Corp.’s BB corporate credit rating and stable outlook are unchanged following news that the company plans to acquire online retailer zulily Inc. in a transaction valued at $2.4 billion.

The ratings on the secured debt issued by its QVC subsidiary also remain at BBB- with a 1 recovery rating, which indicates 90% to 100% expected default recovery.

The company expects to finance the acquisition with a combination of cash, equity and about $900 million revolver borrowings, S&P said.

Pro forma for the additional borrowings, the agency said it anticipates leverage to increase to 3x from an estimated 2.7x as of June.

The transaction will modestly improve the company’s business risk profile by diversifying its multiplatform strategy, broadening its customer base and providing some opportunities for cost savings, S&P said.

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