S&P downgrades Welbilt

S&P said it downgraded Welbilt Inc. and its senior secured credit facilities to CCC+ from B-. The agency also lowered the rating on the company’s senior unsecured notes to CCC from CCC+. The recovery ratings are unchanged.

S&P also removed the ratings from CreditWatch with negative implications.

Recently, Welbilt resolved its near-term covenant concerns with its lenders by obtaining, among other changes, a four-quarter suspension of its financial covenants, S&P said.

“While this amendment alleviates some of Welbilt's near-term covenant issues, we do not believe it will have enough of a cushion under the reinstated covenants in the second quarter of 2021 given its higher expected leverage over the next year. Based on our scenario forecasts, we anticipate that the company's revenue will decline by 25%-30% in 2020 and lift its adjusted leverage well above 10x,” the agency said in a press release.

The outlook is negative.

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