OREANDA-NEWS. S&P Global Ratings said today that it affirmed its 'B' corporate credit rating on Washington, D. C.-based Blackboard Inc. The rating outlook is stable.

At the same time, we affirmed our 'B+' issue-level rating on the company's senior secured first-lien term loan. The '2' recovery rating is unchanged, indicating our expectation for substantial recovery (70%-90%; lower half of the range) of principal in the event of a payment default.

We also assigned our 'CCC+' issue-level rating and '6' recovery rating to the company's proposed $365 million second-lien senior secured notes due November 2022. The '6' recovery rating indicates our expectation for negligible recovery (0%-10%) of principal in the event of a payment default.

The rating affirmation reflects our view that Blackboard's risk tolerance is still high, with debt leverage in the high-6x area pro forma for its acquisition of Higher One Holdings Inc. in August 2016.

"The stable outlook reflects our expectation that Blackboard's leading market position and significant recurring revenue base will support consistent revenue growth and operating margins over the next 12 months," said S&P Global Ratings credit analyst Tuan Duong.

We could lower our corporate credit rating on the company if increased competition leads to deterioration in its market position or profitability, or if further debt-financed acquisitions cause its leverage to approach 8x.

We believe an upgrade is unlikely over the next 12 months because of the company's highly leveraged capital structure. However, we could raise the rating if the company can maintain its debt leverage at or below 5x.