Two major Wall Street ratings services have expressed concerns about iHeartCommunications‘ debt exchange of $476 million of senior unsecured notes due 2018, for a like amount of senior secured Priority Guarantee Notes due 2021.
Moody’s Investors Service considers the swap to be “a distressed exchange.”
At the same time, Fitch Ratings downgraded iHeart’s long-term issuer default rating (IDR) to “RD,” from “C”, following the closing of what it also has termed a “distressed debt exchange.” But, unlike Moody’s, Fitch upgraded iHeart’s Long-Term IDR to “CC” from “RD,” which Fitch believes is reflective of the post-DDE credit profile.
The actions come following the Feb. 3 expiration of its private offer to eligible holders of iHeart’s outstanding 10.0% Senior Notes due 2018 to exchange these notes for newly issued 11.25% Priority Guarantee Notes due 2021.
As of the Expiration Time, approximately $737.9 million in aggregate principal amount (or, approximately 86.8%) of the outstanding notes — including approximately $503 million in aggregate principal amount of outstanding notes held by iHeart subsidiaries, had been validly tendered and not withdrawn in the exchange offer.
At the time, iHeart said it expected to deliver the new notes on Tuesday (2/7). This allowed iHeart to issue approximately $476.4 million in aggregate principal amount of the new notes, including approximately $241.4 million in aggregate principal amount of new notes to its subsidiaries.