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S&P rates Sonic Automotive convertibles B
Standard & Poor's said it assigned its B rating to Sonic Automotive Inc.'s $150 million convertible senior subordinated notes due 2015. At the same time, the BB- corporate credit rating was affirmed.
The outlook is stable.
The ratings reflect the company's high debt leverage and modest cash flow protection, combined with its weak business profile as a consolidator in the highly competitive U.S. automotive retailing industry, S&P said.
However, automotive retailers like Sonic continue to face numerous business challenges, including cyclical demand, tough competition, thin profit margins and weak bargaining power with automakers, which is due to the fragmented nature of the industry and the retailers' heavy dependence on a small number of large manufacturers, S&P said.
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