S&P cuts American Residential Services outlook to negative

Standard & Poor's said it revised its outlook on American Residential Services LLC to negative from stable.

At the same time, the agency said it affirmed its ratings on American Residential Services, including the B corporate credit rating.

In addition, S&P said it affirmed its issue-level and recovery ratings on the company's $165 million of senior secured second-lien notes due 2015. The $165 million notes are rated B while the recovery rating is 4.

"The outlook revision reflects its view that American Residential Services is pursuing a more aggressive financial policy than originally expected, and that the company's EBITDA interest coverage ratio will be below medians over the next several quarters, about 1.6x on a pro forma basis, which is weak for the current rating category," explained S&P credit analyst Mark Salierno.

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