S&P cuts Quiksilver

Standard & Poor's said it lowered its corporate credit rating on Quiksilver Inc. to B- from B. The outlook is negative.

At the same time, the agency said it lowered the issue-level rating on Quiksilver's €200 million European senior unsecured debt to B- from B. The agency also revised the recovery rating on this debt to 4, indicating an expectation of average recovery for noteholders in the event of a payment default, from 3.

In addition, S&P said it lowered its issue-level rating on the company's $400 million senior unsecured debt to CCC from CCC+.

"Today's rating actions reflect our view that Quiksilver's profitability has materially declined, liquidity has become constrained, and covenant cushion has tightened to below 10%," said S&P credit analyst Jacqueline Hui in a news release.

"We believe the company's operating performance could continue to be pressured and covenant tests could potentially be breached when the interest coverage steps up next quarter."

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