S&P drops Sotheby's

Standard & Poor's said it lowered its corporate credit rating on Sotheby's to BB- from BBB-.

The agency said that the three-notch downgrade follows what, in its view, has been a severe decline in company performance due to the greatly reduced art auction market, the expectation that business will remain depressed throughout 2009, a substantial increase in debt leverage, and its projection that, absent an amendment or other relief, Sotheby's is likely to breach a financial covenant in the near term.

At the same time, the agency said it removed the ratings from Creditwatch with negative implications, where they were placed on Feb. 9.

The outlook is negative.

At the same time, the agency said it lowered the rating on the company's senior unsecured notes to B from BBB- and assigned a recovery rating of 6 to the notes. It also lowered the rating on the company's convertible notes to B from BBB- and assigned a recovery rating of 6 to the notes.

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