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S&P: Building Materials outlook negative
Standard & Poor's said it affirmed Building Materials Corp. of America's B+ corporate credit rating, revised the recovery rating on the company's $975 million first-lien term loan due 2014 to 3 from 2, lowered the loan's rating to B+ from BB- as a result and assigned a 3 recovery rating to the $250 million 7¾% senior notes due 2014.
All ratings were removed from CreditWatch, where they were placed with negative implications on Jan. 10, and the outlook is negative.
The agency said the affirmation and CreditWatch removal reflect its assessment that despite the high likelihood that competitive conditions in the residential construction and repair markets will remain difficult in the next several quarters, Building Materials' operating results will stabilize somewhat. S&P attributed its prediction to an uptick in volume resulting from storm-related repairs in the Midwest and southern United States, the recovery of increased raw material costs via pricing improvements and the full realization of synergies related to the 2007 acquisition of ElkCorp.
S&P said the company's cyclical earnings, the weak operating environment, volatile petroleum-based raw material costs and a highly leveraged financial profile outweigh Building Materials' presence as North America's largest roofing manufacturer, its national distribution network and its good brands.
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