S&P cuts Guitar Center outlook

Standard & Poor's said it revised its outlook on Guitar Center Holdings Inc. to negative from stable.

At the same time the agency said it affirmed all existing ratings on the company, including the B- corporate credit rating.

The agency said it rates Guitar Center subsidiary's $375 million revolver due 2016 B+ with a recovery rating of 1, indicating an expectation for high recovery in the event of a payment default.

The agency said it rates the company's $650 million term loan due 2017 B- with a recovery rating of 3, indicating an expectation for meaningful recovery of principal in the event of a payment default.

In addition, S&P said it rates both Guitar Center Inc.'s $375 million cash interest-paying senior unsecured notes due 2017 and Guitar Center Holdings' $401.758 million senior unsecured notes due 2018 CCC. Both notes have a recovery rating of 6, indicating an expectation for negligible recovery in the event of a payment default.

The agency said its ratings on Guitar Center reflect its assessment that the company's liquidity is less than adequate but sufficient to avoid a default within two years.

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