S&P lowers National Waterworks

Standard & Poor's said it lowered its corporate credit and senior secured debt ratings on National Waterworks Inc. to B+ from BB- and its subordinated debt rating on National Waterworks to B- from B. The outlook is negative.

S&P said the rating actions reflect financial policies more aggressive than S&P had previously expected.

The company recently announced its intention to issue $250 million of unrated senior unsecured notes at a newly created holding company, mainly for the purpose of providing its equity sponsor a dividend. As a result, pro forma total debt to EBITDA will initially spike to 5.8x from 3.9x.

Furthermore, while debt leverage may decline for a short period of time following a dividend distribution, S&P said it expects that shareholders' very aggressive financial policies will constrain credit quality.

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