S&P downgrades K&N Parent

S&P said it lowered the K&N Parent Inc.’s issuer credit rating to CCC from CCC+, and the issue-level ratings on the company’s first-lien term loan and revolver to CCC+ from B- and on the second-lien term loan to CC from CCC-.

Concurrently, S&P removed the ratings from CreditWatch, where it had placed them with negative implications on March 23.

Besides weakening sales from the pandemic, K&N’s operating performance continues to weaken as growth in sales of lower-margin original equipment manufacturer products has outpaced aftermarket sales, S&P said.

“S&P Global Ratings sees elevated risk of a distressed debt exchange because K&N’s capital structure appears unsustainable over the long-term and the company is likely to experience a liquidity crisis in the near term,” the agency said in a press release.

The outlook is negative.

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