S&P cuts Generac loan

Standard & Poor's said it would keep its ratings on Generac Power Systems Inc., including the BB- corporate credit rating, on CreditWatch with negative implications. The ratings were placed on CreditWatch May 8.

At the same time, the agency said it lowered the issue-level rating on Generac's proposed term loan to B+ from BB-. The agency said it also revised the recovery rating to 3, indicating expectations of meaningful recovery in the event of a default given the increased amount of senior secured deb, from 2.

If the company completes its refinancing transaction as currently proposed, S&P said it would likely lower the corporate credit rating on Generac by one notch to B+.

"The rating actions follow Generac's announcement that it intends to issue $900 million of new debt - reduced from the previously proposed $1.2 billion - to repay existing debt as well as fund a special dividend to shareholders of approximately $6 per share," said S&P credit analyst Megan Johnston in a news release.

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