S&P downgrades Resolute

S&P said it lowered the rating on Resolute Forest Products Inc.'s senior unsecured notes to B+ from BB-.

The agency also said it revised the recovery rating on the notes to 5 from 4. The 5 recovery rating indicates 10% to 30% expected default recovery.

The downgrades follow news that the company entered into a new senior secured credit agreement with an aggregate lender commitment of up to $185 million.

The agreement comprises a $46.25 million nine-year term loan and $138.75 million six-year revolving credit facility.

This increase of secured credit facilities within the company's capital structure should result in weaker recovery prospects for unsecured claims in the agency’s hypothetical default scenario, S&P explained.

The company’s BB- long-term corporate credit rating and negative outlook are unchanged, the agency said.

The new credit facilities will reinforce Resolute's strong liquidity by increasing expected sources of cash in the next 12 months by more than 30%, S&P said.

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