S&P cuts American Capital

Standard & Poor's said it lowered its ratings on American Capital Ltd., including lowering the long-term counterparty credit rating to BBB- from BBB.

The firm remains on Creditwatch with negative implications where it was placed Nov. 10, the agency noted.

"The rating action reflects the likelihood of additional large write-downs in American Capital's investment portfolio and the funding pressure that has resulted from both deteriorating investment performance and poor market conditions," said S&P credit analyst Jeffrey Zaun.

The agency added that because American Capital maintained strong growth during frothy markets, the firm is particularly vulnerable to write-downs driven by both economic weakness and the repricing of risk that began in July 2007 and accelerated in the second half of 2008.

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