S&P downgrades Alorica

S&P said it lowered its issuer credit rating on Alorica, Inc. to B+ from BB-. The outlook is negative.

At the same time, S&P lowered to BB- from BB the issue-level ratings on Alorica's $225 million revolving credit facility due 2021, $485 million term loan A due 2021 (outstanding) and $450 million term loan B due 2022. The 2 recovery rating on these instruments is unchanged, reflecting an expectation of substantial (70%-90%; rounded estimate: 70%) recovery prospects in the event of default.

“The downgrade reflects our expectation that Alorica's operating performance will remain pressured over the next 12 months due to the combined impacts of a lower base of call volumes in its communications end market, recently executed divestitures, and margin pressures associated with rising wages (the company's most substantial cost component),” S&P said in a news release.

“A newly announced plan to expand into higher margin Latin American and Caribbean cities introduces further potential for revenue volatility associated with execution risk and related service disruptions and customer attrition.”

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