S&P lowers CBL & Associates

S&P said it lowered its issuer credit rating on CBL & Associates Properties Inc. to BB from BB+. The outlook is negative.

The agency also lowered its issue-level rating on subsidiary CBL & Associates LP’s senior unsecured notes to BB+ from BBB-. The 2 recovery rating remains, indicating expectations for substantial (70%-90%; rounded estimate: 75%) recovery in the event of a payment default.

S&P removed the rating from CreditWatch, where it was placed May 1 with negative implications.

At the same time, the agency lowered its issue-level rating on the company's preferred shares to B from B+.

“The downgrade reflects a view that the operating environment for B quality malls, CBL's predominant property type, continues to be under significant distress that hurts the company's operating and financial position,” S&P said in a news release.

“While we believe that retailer bankruptcies subsided from peak levels over the past few years, CBL's ongoing ability to manage the negative secular trends that retailers face (store footprint rationalization, focus on e-commerce, and excess retail capacity) will be challenging.”

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