S&P downgrades API Heat

S&P said it downgraded API Heat Transfer Co. to CCC+ from B-.

The agency also said it lowered the ratings on operating subsidiary API Heat Transfer ThermaSys Corp.'s $265 million senior secured term loan and $35 million revolving credit facility to CCC+ from B-.

The 3 recovery ratings is unchanged, indicating 50% to 70% expected default recovery.

The outlook is negative.

The downgrades reflect an expectation that API's credit measures will remain weak in 2017 as it continues to deal with the challenging demand conditions in its oil and gas and electric power generation end markets, S&P said.

The company has been negatively affected by the sustained weak oil prices and reduced demand from the largest customers in its air cooled group, API's largest segment by revenue, the agency explained.

Low commodity prices and persistent weakness in the mining industry also reduced the demand for some of API's electric power generation products, S&P said.

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