S&P: American Capital on watch

Standard & Poor's said it placed its ratings on American Capital Ltd., including its long-term counterparty rating of BBB, on Creditwatch with negative implications.

The action reflects increased concern about the ability of American Capital to maintain financial performance consistent with the current rating in light of further deterioration in both the economy and private finance markets, the agency said.

S&P added that a prolonged or deep recession will impair a greater proportion of the firm's portfolio companies.

Furthermore, because American Capital maintained strong growth during frothy markets, the firm is particularly vulnerable to write-downs driven by the repricing of risk that began in July 2007 and accelerated in the third quarter of 2008, the agency noted.

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