S&P rates WMG notes B

S&P said it assigned its B issue-level ratings and 3 recovery rating to WMG Acquisition Corp.'s proposed euro- and dollar-denominated senior secured notes due 2024.

The 3 recovery rating indicates an expectation for meaningful recovery (50%-70%; upper half of the range) of principal in the event of a payment default.

The company plans to use the net proceeds to repay all of the outstanding balance on its €157 million 6¼% and $450 million 6% senior secured notes due 2021. Upon the transaction's closing, the agency will withdraw its issue-level ratings on these current outstanding senior secured notes.

WMG Acquisition is a subsidiary of Warner Music Group Corp. (WMG).

S&P said the B corporate credit rating incorporates the company's large and well-diversified portfolio of recordings and compositions across multiple genres and regions and its smaller market share than its significantly larger peers.

The agency expects that adjusted leverage will remain above 5 times through the end of the fiscal year ending Sept. 30, 2017, pro forma for the transaction.

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