S&P affirms MEGA

Standard & Poor's said it affirmed its B+ corporate credit and bank loan ratings on MEGA Brands Inc.

In addition, the agency said it revised the recovery rating on the company's bank loan to 3 from 2.

The agency noted that the 3 recovery rating indicates an expectation of meaningful recovery of principal in the event of a payment default, in contrast to a 2 recovery rating, which indicates the expectation of substantial recovery of principal.

At the same time, S&P said it removed the ratings from CreditWatch with negative implications, where they were placed April 20.

The outlook is stable.

According to the agency, the ratings on MEGA Brands reflect its weak financial profile, customer concentration, seasonal sales, litigation risk and challenging toy industry fundamentals, including a very competitive operating environment and ongoing reliance on successful new product introductions.

S&P noted that these factors are partially offset by the company's good market position within its categories and brand equity.

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