S&P slices RentPath

S&P said it downgraded RentPath LLC to CCC- from CCC+, cut the rating on the company’s secured first-lien credit facilities to CCC- from B- and the recovery rating to 3 from 2 to reflect a lower valuation for the company. The 3 rating indicates S&P’s expectation for meaningful recovery (50%-70%; rounded estimate: 50%) of principal in the event of a payment default. The agency also lowered the second-lien term loan facility to C from CCC-. The recovery rating remains 6, indicating an expectation for negligible recovery (0%-10%; rounded estimate: 0%).

“The downgrade reflects RentPath’s substantial liquidity challenges over the next six to 12 months. As of Sept. 30, 2019, RentPath’s liquidity was very thin, comprising $3.2 million cash and $18 million availability under its revolving credit facility. We expect revolver capacity will be limited to $12 million (30% of its commitments) in comparison with current draw of about $22 million, unless it maintains leverage below 6x, which we believe is unlikely. Therefore, we believe RentPath is vulnerable to a payment default within the next six to 12 months,” S&P said in a press release.

The outlook is negative.

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