S&P rates new Asbury notes B

Standard & Poor's said it assigned its B rating to Asbury Automotive Group Inc.'s proposed $150 million senior subordinated notes due 2013 and affirmed its BB- corporate credit rating on Stamford, Conn.-based Asbury.

The outlook is stable.

Proceeds from the new debt issue will be used to repay existing debt under the company's $450 million credit facility.

Asbury has total debt of $1.2 billion, including floorplan liabilities and off-balance-sheet operating leases and accounts-receivable sales.

"Asbury's strong brand mix, moderate revenue diversity, and stable revenue sources should result in sustained credit quality appropriate for the rating," said S&P credit analyst Martin King. "A highly competitive environment and an aggressive financial policy limit upside potential."

S&P said Asbury's performance has begun to improve, as third-quarter EBITDA was up slightly from last year, but the extent to which financial performance could erode in a severe cyclical downturn is a major risk factor.

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