S&P: CST outlook negative

Standard & Poor's said it revised the outlook on CST Industries Inc. to negative from stable and affirmed its ratings, including the B corporate credit rating.

The agency said the negative outlook reflects the potential for a downgrade if CST is unable to negotiate adequate covenant relief. Weakening operating performance and reduced flexibility in complying with the covenants under its credit agreement could lead to a covenant breach in the second half of 2010, S&P said.

The B rating on CST reflects its highly leveraged financial risk profile, weakened credit metrics, operating margins that are vulnerable to volatile steel prices and a weak business risk profile as a participant in the fragmented and competitive metal storage tank market, the agency said.

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