S&P downgrades Stearns

S&P said it lowered the long-term issuer credit rating on Stearns Holdings LLC to CCC+ from B-, along with the company's senior secured notes to CCC+ from B-.

The outlook is negative.

The recovery rating on the company's senior secured notes is 4, indicating 30% to 50% expected default recovery.

Stearns has upcoming maturities on its $190 million senior secured notes due August 2020.

The downgrades reflect a view that could complete a distressed exchange of its senior secured notes at some point prior to their maturity, S&P said.

While the company has not indicated its plans to pursue another exchange offer in the next 12 months, the agency said it believes the company's leverage is unsustainable in the long term, absent any financial improvement.

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