As usual, we have a week’s worth of ratings actions (mostly downgrades) on the debt of LBO-backed companies from ratings agencies S&P and Moody’s.
This week Warburg Pincus completed a distressed debt exchange, which Moody’s answered with a downgrade. Meanwhile, S&P is encouraged by the not-declining performance of Claire’s Stores, the teen jewelry mall retailer owned by Apollo Management. I guess it’s really true that “flat is the new up.”
Company: Claire’s Stores
Sponsor: Apollo Management
Action: Standard & Poor’s Ratings Services revised the outlook on Pembroke Pines, Fla.-based Claire’s Stores Inc. to stable from negative. At the same time, we affirmed all other ratings on the company, including the ‘B-‘ corporate credit rating.
Highlight: While we believe operations will likely remain challenged given difficult macroeconomic conditions and the company’s dependence on mall traffic, we do not expect them to substantially decline over the near term. Claire’s credit protection metrics have stabilized along with operations and have evidenced little material change over the past year.
Company: Vangent, Inc.
Sponsor: Veritas Capital Partners
Action: Moody’s downgraded the company’s corporate family and probability of default ratings to B3 from B2
Highlight: “The rating downgrade reflects Vangent’s underperformance versus our expectation when the B2 rating was originally assigned, and our view that slim interest coverage and unprofitability over the ratings horizon will likely continue.”
Company: Titan Petrochemical Group Limited
Sponsor: Warburg Pincus
Action: Moody’s today downgraded to C from Ca the company’s US$315.4 million 8.5% senior unsecured notes due March 2012 issued by Titan Petrochemical Group Limited. At the same time, Moody’s affirmed Titan’s Caa3 Corporate family rating.
Highlight: The rating action follows Titan’s announcement that it is commencing an exchange offer and consent solicitation for the 2012 Notes.