S&P cuts ServiceMaster loans, notes

Standard & Poor's said it lowered its corporate credit rating on ServiceMaster Co. to B- from B.

The outlook is stable.

The agency also lowered its issue-level ratings on ServiceMaster's senior secured revolving credit and term facilities to B (one notch higher than the corporate credit rating) from B+. The recovery ratings on these facilities are 2, indicating an expectation of substantial (70% to 90%) recovery for lenders in the event of a payment default.

In addition, S&P lowered its issue-level rating on the company's senior unsecured notes to CCC+ (one notch lower than the corporate credit rating) from B-. The recovery rating on these notes is 5, indicating an expectation for modest (10% to 30%) recovery for lenders in the event of a payment default.

"The one-notch downgrade reflects the downward revision of our forecast as ServiceMaster continues to experience operating difficulties with its TruGreen segment. We now forecast debt-to-EBITDA leverage could remain more than 8x through year-end 2014, as the company continues to address operational issues at its TruGreen division and will start the spring 2014 selling season with a lower customer count," S&P credit analyst Linda Phelps said in a news release.

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