S&P cuts Group 1 Automotive

Standard & Poor's said it lowered the corporate credit rating on Group 1 Automotive Inc. to BB- from BB.

The outlook was revised to stable from negative.

S&P said the downgrade reflects its expectation that in light of a very difficult sales environment for the North American auto retailers, the company's leverage will not fall to levels consistent with the previous rating.

Ratings reflect the company's high leverage resulting from an aggressive acquisition strategy combined with the competitive and cyclical challenges of the automotive retail industry, the agency said.

Auto retailers benefit from diverse revenue streams and the stability and higher margins of their repair parts and services operations and the variable nature of their cost structures, the agency said.

As of March 31, the issuer's lease-adjusted total debt-to-EBITDA ratio rose to 5.6 times, compared with 4.3 times a year earlier.

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