OREANDA-NEWS. S&P Global Ratings said today that it has assigned its 'BB+' issue rating to the proposed €750 million senior unsecured notes due 2024 to be issued by Spain-based wireless telecom and broadcasting infrastructure operator Cellnex Telecom S. A.

We also assigned a recovery rating of '3' to the proposed notes, indicating our expectation of recovery in the lower half of the 50%-70% range in the event of a default.

We understand that Cellnex will use part of the proceeds of the proposed €750 million senior unsecured notes to repay its €200 million term loan and the drawn portion of a €300 million revolving credit facility (RCF) that will subsequently be cancelled.

RECOVERY ANALYSISAlthough the recovery rating on Cellnex's existing senior unsecured notes remains at '3', the increase in leverage due to the issuance of the new €750 million notes has pushed our estimate of recovery prospects to the lower half of the 50%-70% range. In our simulated default scenario, we assume that the company would further increase its gross debt or put in place a new RCF primarily to finance further acquisitions.

We simulate a hypothetical default in 2021 as a result of operating underperformance, most likely the result of a loss of contracts, increased competition, and inability to keep pace with technological advancements, exacerbated by difficulty in integrating future acquisitions.

We value Cellnex as a going concern, reflecting its strong asset base in Spain and Italy.

Simulated default assumptionsYear of default: 2021Emergence EBITDA: €188 million Multiple: 6.5xJurisdiction: SpainSimplified waterfallGross enterprise value at default: €1.22 billionAdministrative costs: €60 millionNet value available to creditors: €1.16 billion-----------------------------------------Priority claims: €88 millionUnsecured debt claims: €2.1 billion* --Recovery expectation 50%-70% (Lower half of the range)*All debt amounts include six months of prepetition interest and 85% RCF drawing.