Fitch Ratings in New York on Wednesday upgraded San Antonio-based iHeartMedia Inc.’s long-term credit rating after the company — which is struggling under $20 billion in debt — extended the maturity of a portion of its bonds due in 11 months.
According to the News-Express, the upgrade came after a “mechanical process” downgrade that happens automatically when a company conducts and completes what Fitch calls a “distressed debt exchange.” IHeart’s subsidiaries owned $503 million of the bonds, while $235 million of the debt exchanged was held by outside investors.
Fitch said the distressed debt exchange “modestly improved the liquidity by reducing the next maturity hurdle coming due in January 2018,” but it’s financial health “remains unsustainable, and iHeart could pursue a broader restructuring of its capital structure over the near term,” Fitch said in its ratings announcement.
Fitch initially dropped iHeartMedia’s long-term debt rating to “RD” from “C” and then upgraded the rating to “CC,” one step higher than “C.”
The rating changes indicate that Fitch believes the debt exchange was successful and improved the company’s short-term liquidity, said Fitch analyst Patrice Cucinello on Wednesday.
IHeartMedia has debts totaling $330 million in December. “And iHeart faces an $8.3 billion maturity wall in 2019,” Fitch noted.
Total iHeartMedia debt is more than $20 billion.
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