S&P lowers Quality Distribution view to negative

S&P said it revised the outlook on Quality Distribution Inc. to negative from stable and affirmed its B- corporate credit rating.

The agency also said it affirmed the B- rating on Quality Distribution's $415 million first-lien term loan due 2022.

The 3 recovery rating is unchanged, indicating 50 to 70% expected default recovery.

S&P also said it affirmed the CCC rating on the company's $120 million second-lien term loan due 2023. The 6 recovery rating is unchanged, indicating 0 to 10% expected default recovery.

The negative outlook reflects Quality Distribution's underperformance relative to expectations over the past year and its elevated debt leverage, the agency said.

The company's energy logistics business – a segment that it entered through acquisitions in 2012 – has been particularly weak and is experiencing operating losses due to low oil prices, S&P said.

The company’s largest segment, chemical logistics, also has experienced some softness as the build-out of the U.S. chemical industry's capacity has been slower than anticipated, the agency added.

The negative outlook reflects the company's underperformance relative to expectations over the past year and a belief that its end-markets will remain weak over the next 12 months, S&P said.

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