S&P lowers Maxcom

Standard & Poor's said it lowered the corporate credit and issue ratings on Maxcom Telecomunicaciones SAB de CV to CC from CCC+.

The agency also said it removed the ratings from CreditWatch with negative implications, where they were placed in December. The recovery rating of 3 on the company's senior secured notes remains unchanged.

The outlook is negative.

The downgrade follows news that the company is offering to exchange its current $200 million senior secured notes due 2014 for an issuance of $200 million 6% senior secured notes due 2020 with a step-up in interest rate by 100 basis points in 2016 and 2018.

The company will not receive any cash proceeds in the exchange offer.

This is viewed as a distressed exchange and tantamount to a default, said Marcela Duenas, an S&P analyst.

The offer implies that the investors will receive less value than the promise of the original securities, the interest rate is lower than the original yield and the new security maturity extends beyond the original maturity date, the agency said.

The exchange offer, if completed, will give Maxcom a more manageable debt maturity profile and will allow the company to reduce its interest-rate payments, S&P said.

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