S&P cuts KAR Auction

S&P said it downgraded KAR Auction Services Inc. and its first-lien term debt to B+ from BB-. The agency also dropped the rating on the unsecured notes B from B+. The 5 recovery rating is unchanged.

“KAR's 2020 credit metrics will likely be weaker than we previously expected. We now expect the company's debt to EBITDA to be in the 5.8x-6.2x range in 2020 (compared with our previous estimate of 5.1x-5.5x) and its FOCF to debt to remain near 10% as the volumes and profitability of its TradeRev business continue to be weaker than our prior assumptions due to a sub-optimal cost structure,” said S&P in a press release.

The outlook is stable.

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