S&P cuts Sbarro

Standard & Poor's said it lowered the corporate credit rating on Sbarro Inc. to CCC- from CCC+ and its $21.5 million revolving facility and $183 million first-lien term loan to CCC- from CCC+. The 4 recovery rating remains unchanged.

The agency lowered the $150 million senior unsecured notes to CC from CCC- with 6 recovery rating.

The outlook is negative.

"The ratings on Sbarro reflect our belief that it might have difficulties complying with the EBITDA covenant under its bank facility," S&P analyst Mariola Borysiak said in a statement.

"We believe that the sluggish economic recovery, coupled with increasing commodity costs will continue to pressure Sbarro's profitability, which could result in a covenant violation in the next two to three quarters."

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