S&P lowers Kraton Polymers

Standard & Poor's said it lowered its corporate credit rating on Kraton Polymers LLC and Polymer Holdings LLC to SD (selective default) from B- and the company's 8 1/8% $200 million senior subordinated notes due 2014 to D from CCC.

The issue rating on the company's first-lien loan remains unchanged at B and was placed on CreditWatch with negative implications.

The lowering of the corporate credit rating follows Kraton Polymers' disclosure that it purchased and retired $30 million of its $200 million senior subordinated notes due 2014 for cash consideration of about $11 million, including accrued interest.

S&P said the SD rating reflects its expectation that Kraton will continue to pay its other creditors despite the completion of this recent debt purchase, and the D rating on the 8 1/8% notes reflects the agency's view that the exchange at this issue level was distressed.

The CreditWatch on the first-lien term loan indicates that S&P may lower or affirm the rating following its reassessment of the default risk and recovery prospects, the agency said.

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