medium · Corporate Credit Analysis cca-core
Cascade Machineworks is a 'BB' rated issuer with a debt stack consisting of $300M in senior secured loans and $200M in senior unsecured notes.
If the firm executes an 'uptiering' exchange where a majority of loan holders exchange into new 'super-priority' loans, what happens to the rating of the non-consenting minority loan holders?
- It is automatically upgraded because the borrower received new capital
- It is likely notched down to reflect structural subordination
- It is suspended until a court confirms the legality of the exchange
- It remains unchanged as they still hold 'first-lien' paper
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