S&P lowers Skilled Healthcare view to negative

Standard & Poor's said it affirmed Skilled Healthcare Group Inc.'s B corporate credit rating.

The agency also said it revised the outlook to negative from stable.

The outlook revision reflects continued weak earnings, a shrinking covenant cushion and tightening liquidity, which are driving weak debt-protection measures, S&P said.

The agency also said it expected the company's earnings to improve as the year progressed.

However, S&P said it now projects EBITDA will remain near current levels. As a result, the agency said it believes the company could have difficulty meeting its covenants in the fourth quarter when the maximum leverage ratio covenant on its senior secured credit facility steps down to 5x.

While S&P said it expects the company to pay down debt, its ability to do so is limited.

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