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Seat Pagine Bonds Extend Drop on Second S&P Downgrade This Week

Seat Pagine Gialle SpA’s bonds extended losses after Standard & Poor’s cut the ratings of Italy’s largest directory publisher for the second time in a week because of a missed coupon payment.

The company’s 10.5 percent notes due 2017 dropped 0.5 cents on the euro to 36 cents at 3:40 p.m. in London, the 11th consecutive day of declines, according to prices compiled by Bloomberg. The notes have fallen 36 percent since the company said Jan. 28 it would suspend a 42 million-euro ($57 million) interest payment before a board meeting on Feb. 6.

S&P downgraded the Turin-based publisher to “Selective Default” from CC because it doesn’t expect the payment to occur within five working days. The rating company, which cut Seat Pagine’s ranking to CC from B- on Jan. 30, said it may downgrade again, to D, if other financial obligations are missed.

Europe’s biggest directories businesses are restructuring as they manage high debt levels and a decline in paper directories. Hibu Plc, the U.K. yellow pages publisher, is in restructuring talks with lenders while European Directories SA of the Netherlands agreed a deal at the end of 2012.

Seat Pagine said Jan. 28 it’s assessing its capital structure given the current economic and market environment.

“Missing the coupon payment was completely unexpected, and took bondholders by surprise,” said Steven Mitra, a London-based partner at LNG Capital LLP. “We’ll get a clearer picture of the level of cash burn on Feb. 6.”

Seat Pagine restructured its debt in September, swapping

1.3 billion euros of junior-ranking bonds into shares and refinancing 686 million euros of loans. That cut the company’s

2.7 billion euros of net debt and left it with about 190 million euros of cash at the end of September.

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