S&P drops Sbarro

Standard & Poor's said it lowered its corporate credit rating on Sbarro Inc. to CCC+ from B-.

Concurrently, the agency said it lowered the ratings on the company's $25 million revolving facility and $183 million first-lien term loan to B- from B+ while it also revised the recovery ratings on these facilities to 2 from 1.

S&P said it also lowered the rating on the $150 million senior notes to CCC- from CCC+ and affirmed the recovery rating of '6' on this debt issue.

The outlook is negative.

The agency added that the downgrade reflects the growing possibility that Sbarro will breach financial covenants under the senior secured credit facilities because poor operating performance is continuing to erode EBITDA.

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