S&P slashes World Acceptance notes

S&P said it lowered its ratings for World Acceptance Corp.’s senior unsecured notes to CCC+ from B and its issuer rating to B- from B.

The agency dropped the notes a notch lower than the issuer rating because the agency said it forecasts priority debt to stay above 30% of adjusted assets and unencumbered assets to unsecured debt ratio to remain above 1x.

The one-notch trim for the issuer rating reflects World Acceptance's weakening operating performance which led the company to seek a waiver to resolve a breach of its fixed-charge coverage ratio and collateral performance indicator covenants on its revolving credit facility, S&P said.

Without a waiver, the company's liquidity will be severely strained because the debt would be accelerated, which would likely lead to a default, the agency said.

The outlook is negative.

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