Weekly Downgrades: How Is Portfolio Company Debt Performing?
As usual, we have a week’s worth of ratings actions on the debt of LBO-backed companies from Standard & Poor’s and Moody’s Investor Services. This week saw downgrades on yet another distressed debt exchange (Duane Reade) and a post-debt exchange upgrade. Rounding it out were a handful of bankruptcy-related withdrawals. Company: Duane Reade Inc. Sponsor: Oak Hill Capital Management Downgrade: S&P lowered its corporate credit rating on the company to 'CC' from 'CCC+' and lowered the subordinated debt rating to 'CC' from 'CCC-'. Moody’s downgraded the company’s probability of default rating to Ca from Caa2. Highlight: The downgrade follows Oak Hill’s announcement to launch a distressed debt exchange for the company. “We view this offer as being tantamount to default given that Duane Reade's highly leveraged capital structure that we believe may be unsustainable over the intermediate term, and the company's weak financial profile.”
