S&P dims SunSource outlook to negative

S&P said it changed the outlook for SunSource (CD&R Hydra Buyer Inc.) to negative from stable and affirmed its ratings, including the B rating on the $700 million first-lien loan due 2024.

“The current state of the high-yield credit markets could make it more difficult for SunSource to refinance its debt obligations. Recent turmoil in the U.S. banking industry and continued macroeconomic uncertainty have made refinancing more difficult for many companies, especially in the high-yield credit markets.

“Our outlook revision also considers that the ABL's springing provision will cause the credit facility to become current 91 days prior to the term loan and adds additional pressure to liquidity. Even with good credit ratios, our rating and outlook incorporate the rising financial and liquidity risks as the time to maturity shortens,” the agency said in a press release.

S&P warned it could downgrade SunSource at least a notch if it is not confident the company can refinance upcoming maturities before the first-lien term loan becomes current.

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