S&P lowers Men’s Wearhouse view to negative

Standard & Poor’s said it affirmed the B+ corporate credit rating on Men’s Wearhouse Inc.

The agency also said it revised the outlook to negative from stable.

S&P also said it affirmed the BB- rating on the term loan and B- rating on the unsecured notes. The 2 recovery rating on the term loan indicates 70% to 90% expected default recovery and the 6 recovery rating on the unsecured notes indicates 0 to 10% expected default recovery.

The outlook revision reflects the significant underperformance at Jos. A Bank and a view that a turnaround of the brand will be a gradual process, the agency said.

Jos. A Bank, which comprises about 25% of the company’s revenue base, has started to move away from its well-known promotions emphasizing bulk purchases to less aggressive promotions, S&P said. But this strategy has so far not been resonating well with consumers, the agency said.

Same-store sales at Jos. A. Bank have been deteriorating at an accelerated rate over the past several quarters and weak sales trends are expected to continue over the next 12 months, S&P said.

Moody’s downgrades Acelity, notes

Moody's Investors Service said it downgraded Acelity LP Inc.’s corporate family rating to B3 from B2, second-lien notes to Caa1 from B3 and senior unsecured notes to Caa2 from Caa1.

The Ba3 rating on the first-lien term loans and revolving credit facility were affirmed. However, given Acelity's current capital structure, if the company was to add incremental senior secured debt, the ratings on these instruments would likely be downgraded to B1.

Concurrently, the agency lowered Acelity's speculative grade liquidity rating to SGL-4 from SGL-2.

The outlook is stable.

Moody’s said the downgrade of the corporate family rating reflects its expectation that it will be difficult for Acelity to meaningfully reduce its very high financial leverage.

Despite moderate underlying growth, headwinds, including the potential negative impact of competitive bidding and the re-entrance of Smith and Nephew's competitive product in the negative pressure wound therapy segment, will constrain EBITDA growth. While the company has indicated its intent to raise equity and reduce leverage through an initial public offering, the timing and extent of debt repayment from such an event is uncertain, particularly given current market volatility.

Moody's also expects that Acelity will continue to pursue tuck-in acquisitions to supplement organic growth.

The downgrade also reflects the agency’s belief that the company's liquidity position will weaken as a result of considerable cash requirements in the near-term, including continued litigation settlement payments, high interest costs as well as upcoming debt maturities.

S&P downgrades Blue Coat

Standard & Poor’s said it lowered the corporate credit rating on Blue Coat Holdings Inc. to B- from B.

The outlook is stable.

The agency also said it lowered the rating on the company’s $1.375 billion first-lien term loan due 2022, including the $225 million incremental loan to B- from B.

The recovery rating remains at 3, indicating 50% to 70% expected default recovery.

S& also said it lowered the rating on the company’s $470 million senior secured notes due 2023 to CCC from CCC+. The 6 recovery rating indicates 0 to 10% expected default recovery.

The downgrades follow news that Blue Coat agreed to acquire Elastica for $280 million, S&P said. The first-lien loan will help fund the acquisition.

The downgrades reflect an expectation that following the acquisition, Blue Coat’s adjusted leverage will remain elevated for the next two years at more than the 7.5x threshold for the B corporate credit rating, S&P said.

While the acquisition positions the company for longer-term growth in the rapidly emerging cloud-application security market, it provides only modest incremental revenue and higher operating expenses over the next 12- to 18-months, the agency said.

DBRS lowers Newalta

DBRS said it downgraded the issuer rating of Newalta Corp. to BB (low) from BB.

The agency also said it revised the company’s recovery rating to RR5 from RR4 based on an anticipated debt recovery of 10% to 30% in a hypothetical default scenario, resulting in a one-notch adjustment to the rating of the unsecured notes to B (high).

The trend also was changed to negative from stable.

Newalta’s operating performance has been in decline through 2015, DBRS said, and the deterioration accelerated in the third quarter of 2015, which was well below expectations.

The negative trend reflects that the key metrics are at the low end of the range for the new issuer rating level, meaning there is little cushion to absorb further weakening in the financial risk profile, the agency said.

Fitch downgrades Pacific Exploration

Fitch Ratings said it downgraded Pacific Exploration and Production Corp.’s foreign- and local-currency long-term issuer default ratings to B- from B+.

Fitch also said it downgraded the long-term rating on Pacific's outstanding senior unsecured debt issuances totaling about $4 billion with final maturities in 2019 and 2025 to B- with recovery rating of RR4 from B+ with recovery rating of RR4.

These ratings also were placed on Rating Watch negative.

The downgrades reflect an expectation that the company’s capital structure will continue weakening over the near term as a result of the agency’s slower oil price recovery expectations, Fitch said.

The agency also said it expects Pacific’s leverage to be near 6x in 2016 if West Texas Intermediate oil price averages $50 per barrel over that period.

This would trigger the 4.5x gross leverage maintenance covenants on about $1.3 billion of bank facilities due in 2017, Fitch said.

Leverage also is expected to remain elevated and the company may have difficulties servicing its debt maturities, which start in 2017 and average about $1 billion every two years between 2017 and 2025, the agency said.

S&P downgrades Sensata

Standard & Poor’s said it lowered the corporate credit rating on Sensata Technologies BV to BB from BB+ and removed the ratings from CreditWatch, where it was placed with negative implications in July.

The outlook is stable.

The agency also said it assigned a BB rating and 4 recovery rating to the company’s new $750 million 5½% senior notes due 2025. The 4 recovery rating indicates 30% to 50% expected default recovery.

S&P also said it lowered the rating on the company’s senior secured debt to BBB- from BBB. The 1 recovery rating on the debt is unchanged, indicating 90% to 100% expected default recovery.

The agency also said it lowered the rating on Sensata’s senior unsecured notes to BB from BB+ and revised the recovery rating on the notes to 4 from 3. The 4 recovery rating indicates 30% to 50% expected default recovery.

The downgrades reflect a substantial increase in the company’s debt used to fund the acquisition of Custom Sensors & Technologies Inc.’s sensing portfolio. The additional debt will weaken the company’s debt-based credit metrics, S&P said.

Moody’s rates Sensata Technologies UK notes Ba3

Moody's Investors Service said it assigned a Ba3 rating to Sensata Technologies UK Financing Co. plc’s new $750 million senior unsecured notes.

At the same time, the agency affirmed all debt ratings of Sensata Technologies BV, including the Ba2 corporate family rating, Ba2-PD probability of default rating, senior secured bank credit facility at Baa3, senior unsecured debt rating at Ba3 and speculative grade debt rating at SGL-3.

The outlook remains negative.

Moody’s said the assignment of a Ba3 rating to Sensata Technologies UK’s new $750 million senior unsecured notes reflects their unsecured nature and ranking in line with Sensata’s other unsecured notes.

The affirmation of Sensata's ratings reflects the agency’s belief that the additional leverage coming from the acquisition of most of Custom Sensors & Technologies' (B2 stable) sensor businesses will prove to be temporary in nature.

Moody’s ups Synovus view to positive

Moody's Investors Service said it affirmed the ratings of Synovus Financial Corp. and its bank subsidiary, Synovus Bank, and changed the outlook to positive from stable.

Synovus Financial is rated Ba2 for senior unsecured debt. Synovus Bank has bank deposit ratings of Baa2/Prime-2 and a standalone baseline credit assessment of ba1. Its issuer rating is Ba2 and its counterparty risk assessment is Baa3 (cr)/Prime-3 (cr).

Moody’s said the change in outlook reflects the improved risk governance at Synovus, which has led to financial performance comparable with its higher rated U.S. peers. Synovus first established its enterprise risk management program in 2008 and the enhancements made since then have resulted in a reduced commercial real estate (CRE) concentration (50% lower than its peak during the recession), significantly lower nonperforming assets, and more stable earnings.

S&P lifts Affinity to stable

Standard & Poor’s said it revised the outlook on Affinity Gaming to stable from negative and affirmed all of the ratings on the company, including its B corporate credit rating.

The outlook revision reflects an expectation that Affinity’s credit measures will continue to improve through 2016 as a result of operational and marketing efficiencies recently implemented, S&P said.

Affinity also is benefiting from modest revenue growth across much of its portfolio of properties, the agency said.

S&P also said it anticipates EBITDA will recover to pre-2013 levels this year as a result of both operating efficiencies and revenue growth.

Moody’s lifts Affinion CFR, notes

Moody's Investors Service said it revised Affinion Group Holdings, Inc.'s probability of default rating to Caa1-PD/LD from Ca-PD and raised its corporate family rating to Caa1 from Caa2.

The senior unsecured notes due 2015 and senior secured PIK/Toggle notes due 2018, as well as Affinion Investments, LLC's senior subordinated notes due 2018 were upgraded to Caa3 from Ca.

Affinion Group, Inc.'s senior secured bank credit facility (revolver and first-lien term loan) due 2018, senior secured second-lien term loan due 2018 and senior unsecured notes due 2018 were all affirmed at B1, Caa1 and Caa3, respectively.

These actions follow the completion of a Nov. 9 recapitalization that raised $110 million of new capital for Affinion in a rights offering and exchanged roughly $585 million of Affinion Investments’ outstanding 13½% senior subordinated notes due 2018 and Affinion's outstanding 13¾%/14½% senior secured PIK/toggle notes due 2018 for equity of Affinion.

Moody's said it deems the exchange of the notes to be a distressed exchange. The /LD designation was temporarily added to the probability of default rating to denote the limited default that occurred on the notes that were exchanged for equity. It will be removed within about three business days.

Concurrently, the agency upgraded the speculate grade liquidity rating to SGL-3 from SGL-4 primarily based on the benefits to be derived from the company's revised capital structure including meaningful reduction in debt service costs and correspondingly stronger cash flow.

Moody's also expects the quality of earnings to improve, with fewer one-time cash charges and better cash flow conversion.

The outlook was changed to stable from negative.

Proceeds from the new $110 million 7½% cash/PIK senior notes due 2018 (unrated) will be used for general working capital purposes, including repaying certain intercompany loans and revolver borrowings, and to pay fees and expenses associated with the exchange offers.

S&P puts Roundy’s on positive watch

Standard & Poor’s said it placed the ratings on Roundy’s Supermarkets Inc. on CreditWatch with positive implications.

Parent company Roundy’s Inc. announced that it entered into a definitive agreement to be acquired by Kroger Co. for about $800 million.

As part of the acquisition, the agency said it expects Kroger will refinance Roundy’s existing debt. Roundy’s will become a subsidiary of Kroger following the close of the transaction, S&P said.

The acquisition will grow Kroger’s footprint into Wisconsin, where it currently lacks a presence, the agency said, and expand Kroger’s growth in the Chicago metropolitan area market where Roundy’s operates 34 stores under the Mariano’s banner.

S&P said it expects to resolve the CreditWatch placement on Roundy’s upon the acquisition close.

S&P: Centric on negative watch

Standard & Poor’s said it placed Centric Health Corp.’s B- corporate credit rating on CreditWatch with negative implications.

Despite an improvement in Centric’s operating performance in the past several quarters, the agency said the company’s free cash flows remain inconsistent, liquidity remains less-than-adequate and it faces a maturity of $13 million in the near term.

By offering a number of different services, the company seeks to be an efficient and cost-effective provider, the agency said.

Centric is currently undergoing a restructuring of its business, selling underperforming and nonstrategic businesses, cutting costs and redeploying divestiture proceeds to expand its remaining core businesses, S&P said.

Meanwhile, the company remains highly leveraged with adjusted debt leverage in the 9x range, the agency said.

The CreditWatch placement will be resolved when Centric provides further details on its plans for meeting the convertible debt maturity, S&P said.

S&P lowers Quad/Graphics view to negative

Standard & Poor’s said it revised the outlook on Quad/Graphics Inc. to negative from stable.

The agency also said it affirmed the company’s BB- corporate credit rating.

The outlook revision follows Quad’s third-quarter results, which saw revenue decrease 6.5% year-over-year and adjusted EBITDA margin to 9.3% from 12.7%.

The negative outlook reflects an expectation that Quad’s operating performance will continue to deteriorate over the next six- to 12-months, S&P said.

The outlook also considers the decline in covenant headroom to 18.7% and the risk that increased price competition or structural headwinds could cause adjusted debt leverage to remain elevated, the agency said.

Fitch downgrades Seacor

Fitch Ratings said it downgraded Seacor Holdings Inc.’s long-term issuer default rating to B+ from BB-.

The outlook is stable.

The downgrade reflects the combined effects of the weak oil price environment and down-cycle in the offshore support vessel market, which have increased revenue and cash flow risk, Fitch said.

The ratings consider the company’s asset quality and favorable fleet-renewal strategy, the agency said, along with the size and diversity of vessel operations that support offshore drilling.

These positives are offset by the continued softening offshore support-vessel market environment and influence of a persistently weak commodity pricing environment, Fitch said.

S&P lifts HRG Group to stable

Standard & Poor’s said it affirmed all of the ratings on HRG Group Inc., including its B corporate credit rating, B+ senior secured note rating and CCC+ senior unsecured note rating.

The agency also said it revised the outlook to stable from negative.

HRG Group will receive about $1.25 billion gross proceeds from the proposed sale of its 81%-owned subsidiary Fidelity & Guaranty Life to Anbang Insurance Group Co. Ltd., S&P said.

The proposed transaction will enhance HRG’s financial flexibility, the agency said.

The ratings and outlook assume that the transaction will close consistent with expectations, S&P said.

The outlook revision also considers an expectation that HRG will use a substantial amount of its proceeds it receives from the sale for debt repayment and liquidity enhancement, the agency said.

The ratings reflect the company’s weak asset diversity, which will worsen following the Fidelity & Guaranty sale, S&P said.

The ratings also consider HRG’s inconsistent track record with respect to investment performance, the agency said.

S&P lifts Braas Monier

Standard & Poor’s said it raised the long-term corporate credit rating on Braas Monier Building Group SA to BB- from B+.

The agency also said it affirmed the company’s short-term ratings at B.

S&P also said it raised the ratings on the company’s €315 million senior secured floating-rate debt instruments to BB- from B+, along with the ratings on its €100 million revolving credit facility and €200 million term loan to BB- from B+. The recovery rating on these facilities is 4, indicating 30% to 50% expected default recovery.

The outlook is stable.

The upgrades reflect a view that Braas Monier’s management has improved the group’s profitability, including significantly reducing its cost base, S&P said.

S&P upgrades Bravida

Standard & Poor’s said it raised the long-term corporate credit rating on Bravida Holding AB to BB- from B.

The agency also said it removed the rating from CreditWatch with positive implications, where it was placed in October.

The agency also said it subsequently withdrew the long-term rating at Bravida’s request. S&P also said it withdrew the B rating on the senior secured notes because they were fully repaid.

The upgrade follows Bravida’s successful initial public offering on the Stockholm Stock Exchange and subsequent debt reduction, the agency said.

Bravida also used a new senior bank facility to repay existing senior secured notes, S&P said.

In addition, all outstanding shareholder loans and payment-in-kind notes have been repaid, the agency said, and Bravida’s financial sponsor owner, Bain Capital, has reduced its shareholding to about 56.2%.

As a result of the debt repayments and Bain Capital’s decreased stake, S&P said it revised Bravida’s financial risk profile upward to aggressive from highly leveraged.

Moody’s upgrades Lear notes to Ba1

Moody's Investors Service said it upgraded the ratings of Lear Corp.’s senior unsecured notes to Ba1 from Ba2.

The remaining ratings are unchanged, including the Ba1 corporate family rating, Ba1- PD probability of default rating and stable outlook. The speculative grade liquidity rating is SGL-1.

Moody’s said the upgrade reflects the attainment by Lear of certain conditions under the company's senior secured bank credit facilities, which permit the release of collateral. The agency believes Lear will seek this release. Following the release of collateral under the bank credit facilities, Lear's senior unsecured notes will be equal in right of payment to the credit facilities and benefit from a lift in priority under Moody's Loss Given Default Methodology resulting in the one-notch upgrade.

S&P: Mattamy view to stable

Standard & Poor’s said it revised the outlook on Mattamy Group Corp. to stable from negative.

The agency also said it affirmed the company’s BB corporate credit rating and BB rating on its senior unsecured notes.

The recovery rating on the notes is 3, indicating 50% to 70% expected default recovery.

The outlook revision was largely driven by the improvement in the company’s credit measures, which are stronger than previously forecasted, S&P said.

After the company announced the acquisition of Monarch Homes in December 2014, the agency said it projected the company to end its fiscal 2015 with adjusted debt-to-EBITDA of between 4.5x and 5x.

But after experiencing more favorable sales-price appreciation and better gross margins from both its land and homebuilding operations, the company finished its fiscal year at 3.9x adjusted debt-to-EBITDA, S&P said.

The company is expected to continue increasing community count and expanding its platform in the United States in 2016, in addition to growth in its Canadian operations, the agency added.

Moody’s rates Soho House Group CFR Caa1

Moody's Investors Service said it assigned a Caa1 corporate family rating and Caa1-PD probability of default rating to Soho House Group Ltd. (Soho House) and withdrew the Caa1 corporate family rating and Caa1-PD probability of default rating on Soho House Bond Ltd.

Concurrently, the agency affirmed the Caa1 rating on the £145 million senior secured notes due 2018 assigned at Soho House Bond.

The outlook is stable.

Moody's said its decision to move the Caa1 corporate family rating and Caa1-PD probability of default rating to Soho House Group from Soho House Bond follows the Oct. 23 announcement of the issuance of £40 million of PIK toggle notes due in October 2019. The PIK notes (unrated) were issued by Soho House Group, which is the top holding company of the group that holds the shares of Soho House Bond, which issued the outstanding senior secured notes in 2013.

The new ratings are therefore assigned at the entity level where the whole debt of Soho House group is consolidated.

Moody’s drops Amec Foster, notes

Moody's Investors Service said it downgraded Amec Foster Wheeler plc's rating to Ba1 from Baa3 and converted the long-term issuer rating into a corporate family rating, in line with the agency's practice for corporates with non-investment-grade ratings.

Consequently, Amec’s senior unsecured medium-term note program was also downgraded to provisional Ba1 from provisional Baa3 and the Baa3 issuer rating was withdrawn.

Moody's assigned a corporate family rating of Ba1 and assigned a Ba1-PD probability of default rating Amec. The corporate family rating, which is typically assigned to speculative-grade corporates, reflects the agency’s opinion on Amec’s ability to honor its financial obligations as if it had a single class of debt and a single consolidated legal entity structure.

Moody’s drops ArcelorMittal, notes to Ba2

Moody's Investors Service said it downgraded ArcelorMittal's corporate family rating and probability of default rating to Ba2 and Ba2-PD from Ba1 and Ba1-PD, respectively, and its senior unsecured ratings to Ba2 from Ba1.

The short-term ratings were affirmed at Not Prime.

The outlook is negative.

"Our downgrade of ArcelorMittal's rating to Ba2 from Ba1 primarily reflects its weaker operating performance since the beginning of 2015 as a result of falling steel prices, and a material decrease in EBITDA from its mining operations," Hubert Allemani, Moody's vice president, senior analyst and lead analyst for ArcelorMittal, said in a news release.

"While the company has improved its steel margin in Europe, its EBITDA will remain weak for the rest of 2015, with little prospects of recovery in the short term to the levels required for a Ba1 rating."

Moody’s reviews Dometic

Moody's Investors Service said it placed the B3 corporate facility rating and B3-PD probability of default rating of Dometic Group AB on review for upgrade after Dometic filed for an initial public offering on Nasdaq Stockholm.

The Caa2 rating of the outstanding SEK 2,662,000,000 equivalent PIK toggle notes remains unchanged on the expectation that these notes will be repaid from the IPO proceeds.

Moody’s said the action follows Dometic's definitive IPO filing and the publication of the IPO prospectus on Nov. 11. It plans to raise SEK 4.6 billion from the issuance of new shares by Nov. 27.

The company also announced that on Oct. 27, it arranged new bank credit facilities with four Swedish banks to partially refinance the existing bank credit facilities and repay the remainder with the IPO proceeds. The new bank credit facilities include a multi-currency revolving credit facility of around SEK 1,235,000,000 equivalent, amortizing term loans of around SEK 1.02 billion equivalent and other term loans of around SEK 3,569,000,000 equivalent.

Dometic plans to use the SEK 4.6 billion IPO proceeds to completely repay the outstanding SEK 2,662,000,000 equivalent PIK toggle notes and also to reduce a portion of the senior secured bank debt on Dec. 2, 2015.

Moody’s drops NCR CFR, notes

Moody's Investors Service said it downgraded NCR Corp.’s corporate family rating to Ba3 from Ba2 and probability of default rating to Ba3-PD from Ba2-PD following the announcement that the company will buy back $1 billion of its stock.

The buyback will be funded with the proceeds from the issuance of $820 million in new convertible preferred equity to the Blackstone Group and borrowings under its revolving credit facility.

Moody's also downgraded the ratings on the company's senior unsecured notes to B1 from Ba3 and affirmed the SGL-2 short term liquidity rating.

The outlook was changed to stable from negative.

Moody’s said the downgrade of the corporate family rating to Ba3 reflects NCR's willingness to take on incremental credit risk to finance increased share repurchases as it is going through an ongoing business transformation amid a rapidly shifting landscape for its legacy hardware products. The agency recognizes that competitor innovation, challenging macroeconomic forces or technology changes periodically impact the sales of the company's products.

S&P: Ephios Bondco secured notes B+, unsecureds B-

Standard & Poor’s said it assigned a B+ long-term corporate credit rating to Ephios Bondco plc.

The agency also said it assigned a rating of B+ to Ephios Bondco’s €1.485 billion senior secured notes due in 2022. The recovery rating on the notes is 4, indicating 30% to 50% expected default recovery.

S&P also said it assigned a B+ long-term corporate credit rating to Ephios Holdco II plc and a B- rating to the €375 million senior unsecured notes issued by Ephios Holdco II.

The agency also said it assigned a recovery rating of 6 to the debt, reflecting 0 to 10% expected default recovery.

The outlook is stable.

The ratings reflect a view that Cinven, the private equity firm that owns them, has successfully completed the acquisitions of Labco SA and Synlab Holding GmbH.

S&P said it expects both the acquired entities to be consolidated under Ephios Bondco.

Ephios Holdco II is considered to be a core group entity as it is a financing subsidiary, the agency said.

The ratings reflect the group’s satisfactory business risk profile and highly leveraged financial risk profile, S&P said.

Moody’s might raise Roundy’s

Moody's Investors Service said it placed the ratings of Roundy's Supermarkets, Inc. on review for upgrade, including its B3 corporate family rating and B3-PD probability of default rating.

The speculative grade liquidity rating of SGL-2 was affirmed.

The review for upgrade is prompted by Kroger Co.'s (Baa2 stable) and Roundy's announcement that Kroger would be acquiring Roundy's for $3.60 per share plus Roundy's existing debt in a transaction valued at about $800 million or about 7 times trailing EBITDA.

The transaction is expected to close during the fourth quarter of fiscal 2015.

The review based upon Moody's view that, should the acquisition by Kroger be consummated, Roundy's will become part of an enterprise with a stronger overall credit profile, and hence a potentially higher rating than if Roundy's remains a stand-alone company. Because Kroger has no presence in Wisconsin, there is minimal store overlap and the agency said it expects the transaction to be approved by the FTC.

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