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S&P lowers Yellow debt to B+
Standard & Poor's said it affirmed its ratings on YRC Worldwide Inc., including the BB corporate credit rating, and removed them from CreditWatch, where they were placed with negative implications on Feb. 21.
At the same time, S&P lowered its issue-level rating on Yellow Corp.'s unsecured debt to B+ from BB and assigned a recovery rating of 6 to this debt. The issue-level rating on the now partly secured notes at Roadway LLC is unchanged at BB, and a recovery rating of 4 was assigned to this debt.
The outlook is negative.
The ratings were placed on CreditWatch because of heightened concerns over the company's refinancing risk, earnings performance and liquidity position over the next year given the slowing U.S. economy and continuing pressures in the trucking sector. The agency said the company has since obtained an amendment to its credit facility that allows additional covenant relief and has renewed its 364-day asset-backed security facility, which was due to expire on May 16.
YRC has meaningful debt maturities over the next year and expects to use some combination of free cash flow, refinancing, and/or capacity under its amended bank facility to meet these maturities. S&P believes the additional covenant relief provides sufficient room and expects the company to remain in compliance with its covenants.
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