S&P cuts Teranet, debt to BBB

Standard & Poor's said it lowered its long-term issuer credit rating on Teranet Inc. to BBB from BBB+.

At the same time, the agency lowered its issue-level rating on Teranet Holdings LP's senior secured debt to BBB from BBB+.

In addition, S&P assigned its BBB long-term corporate credit rating to Teranet Holdings and withdrew its BBB long-term issuer credit rating on Teranet.

The assignment of the corporate credit rating to Teranet Holdings reflects the consolidation of Teranet and other related subsidiaries (Teranet Enterprises Inc., Teranet Services Inc. and Teranet Manitoba LP) at the holdco level. Teranet is a guarantor of the debt issued by Teranet Holdings LP.

The outlook is stable.

"The downgrade reflects our expectation that Teranet's credit measures will be consistent with a highly leveraged financial risk profile over the next few years," S&P credit analyst David Fisher said in a news release.

"Specifically, we expect Standard & Poor's adjusted funds from operations interest coverage – a key credit measure we use to assess Teranet – to be below 2x over the next few years, with contemporaneously low funds from operations-to-debt of less than 5%."

"Accordingly, we are revising our financial risk profile on Teranet to highly leveraged from aggressive, which is triggering the downgrade," Fisher added in the release.

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