S&P downgrades Sears

S&P said it lowered the corporate credit rating on Sears Holdings Corp. to CCC- from CCC.

The outlook is negative.

At the same time, the agency lowered the issue-level ratings in line with the corporate credit rating.

The downgrade follows Sears’ announcement that it is in discussions with its lenders regarding potential transactions that would modify the agreement terms of more than $1 billion of its non-first-lien debt, S&P explained.

The company is seeking to enhance liquidity and strengthen the balance sheet, and the potential transactions would include reducing cash interest payment and extending on some of its debt maturities.

“If completed, we would likely view these loan modifications as distressed and tantamount to a selective default because the lenders could receive less than par value and/or less than the original promise on the current debt,” the agency said in a news release.

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