S&P cuts Sears Canada to junk

Standard & Poor's said it downgraded its ratings on Sears Canada Inc. to BB+ from BBB, reflecting the shift of financial policy and philosophy of 54% new majority-owner and controlling shareholder Sears Holdings Corp.

The agency said Sears Canada's credit profile has been weakened by the financial policy decision to sell its financial services and credit card business, reducing a historically important source of earnings and cash flow.

Finally, the company's current operating performance is weak for the previous ratings and is not expected to improve under new financial policies, S&P added.

Affected ratings include the senior secured and unsecured debt ratings as well as the corporate credit rating. The outlook is negative.

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