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S&P: Realogy on positive watch; loan assigned B-
Standard & Poor's said it placed the CC corporate credit and all other existing ratings for Realogy Corp. on CreditWatch with positive implications.
The agency also said it assigned a preliminary B- rating and a 1 recovery rating to Realogy's proposed extending senior secured revolving credit facility due April 10, 2016, extending senior secured term loan due Oct. 10, 2016 and extending senior secured synthetic letter of credit due Oct. 10, 2016.
S&P also said that Realogy plans to issue $700 million of new senior secured debt financing, which is currently unrated, and use the proceeds to repay a portion of the proposed extended term loan.
The agency said it expects that a provision of the proposed senior secured debt financing would make the lien junior to the company's existing and proposed extending senior secured credit facilities.
The CreditWatch listing reflects an expectation that Realogy's liquidity profile would be improved upon the close of the proposed transactions, which would decrease the level of senior secured first-lien debt in the company's capital structure, S&P said.
The transactions also provide the company with a sufficient cushion under its first-lien senior secured net leverage covenant over the intermediate term, the agency said.
This improvement to Realogy's liquidity profile is only partly offset by an expectation that the proposed transactions will likely add a significant amount of interest expense that the company will need to absorb, depending on the amount of credit facility lenders that are willing to extend, and including the new $700 million secured financing, S&P said.
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