S&P cuts Brunswick Rail

Standard & Poor’s said it lowered to B- from B+ its long-term corporate credit rating on Brunswick Rail Ltd. The outlook is negative.

At the same time, S&P lowered to B- from B+ the long-term issue rating on the company’s $600 million 6½% senior unsecured notes due 2017 issued by Brunswick Rail Finance Ltd. S&P also lowered the recovery rating on these notes to 4 from 3, indicating an expectation of average (30%-50%) recovery prospects in the event of a payment default.

S&P said the downgrade primarily reflects S&P’s view that Brunswick Rail has low headroom under its bank loan covenant and that there is a high likelihood that the company could breach the covenant in 2015.

“This has led us to revise our liquidity assessment to ‘less than adequate’ from ‘adequate,’” S&P said in a news release.

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