S&P: Metaldyne outlook negative

Standard & Poor's said it affirmed its BB- corporate credit and senior secured bank loan ratings on Metaldyne Corp. and the B senior unsecured and subordinated debt ratings. The outlook was revised to negative from stable.

S&P said the outlook revision reflects S&P's near-term concerns related to the company's announcement on March 29 that it will not be able to file its form 10-K because of an independent inquiry into certain matters at the company's Sintered division (about 10% of total sales).

The negative outlook also reflects longer-term concerns that new business wins may not be able to offset the company's highly leveraged capital structure in an industry that remains subject to intense competitive pricing and rising raw material costs.

S&P noted that downside protection is afforded by Metaldyne's niche market-leadership position in certain segments of its markets, good working relationships with the automakers, good engineering capabilities, a concentration on value-added products, and fair customer and platform diversity, which has allowed the company to generate satisfactory operating margins of around 13%.

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