S&P drops Keystone Automotive

Standard & Poor's said it lowered its corporate credit rating on Keystone Automotive Operations Inc. to B from B+.

The senior secured and subordinated debt ratings also were lowered a notch, to B and CCC+, respectively, the agency said.

At the same time, S&P said it assigned a B rating to the company's proposed $200 million senior secured term loan B due in January 2012, with a recovery rating of 2.

The outlook is stable.

S&P noted that the downgrade reflects its view that we no longer expect credit metrics to materially improve beyond what is consistent for current ratings levels.

According to the agency, the ratings on Keystone reflect the company's relatively small EBITDA base, high leverage and acquisitive history and these factors are partially mitigated by the company's position as the leader in the competitive, highly fragmented specialty equipment segment of the automotive aftermarket industry.

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