Weekly Downgrade Wrap-Up: Where Does Portfolio Company Debt Stand?
As usual, we have a week's worth of ratings agency actions on the debt of LBO-backed companies from Standard & Poor's and Moody's Investor Services. This week the agencies were busy withdrawing ratings on bankrupt companies and issuing new ratings on newly-exchanged debt facilities. Almost every action is related in some way to bankruptcy or a distressed debt exchange, which we may as well get used to, because there's a lot of debt out there to be refinanced. To be specific, around $190 billion worth of speculative-grade bonds will mature between 2009 and 2011, according to Moody's. Fortunately $120 billion of that isn't due until 2011. In addition to the downgrades, upgrades and withdrawals, S&P did some outlook revising: The agency affirmed its ratings on Rite Aid Corp. but revised its outlook from ‘negative' to ‘stable.' The company owes its revised outlook to improved liquidity and financial flexibility. Rite Aid, which has investments on Contrarian Capital and Leonard Green & Partners, recently refinanced of the bulk of its 2010 debt maturities, including a new $1.0 billion asset-based revolving credit facility. Currently the company has a ‘B-‘ corporate credit rating.
