Moody's drops Sunstate to Caa1

Moody's Investors Service said it downgraded the corporate family and probability-of-default ratings of Sunstate Equipment Co., LLC to Caa1 from B2 and $107.6 million 10½% second-lien notes due 2013 to Caa3 (LGD5, 83%) from Caa1 (LGD5, 82%).

The outlook remains negative.

The downgrade reflects weaker construction markets, declining used equipment values and concern that a covenant breach could occur under Sunstate's asset-based revolving credit facility, according to the agency.

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