S&P rates Capital Automotive loan B

Standard & Poor's said it affirmed its B corporate credit ratings on Capital Automotive LLC and Capital Automotive LP, affirmed the B rating with a 3 recovery rating on the companies' senior secured debt and assigned a B rating with a 3 recovery rating to Capital Automotive LP's new term loan.

The outlook is negative.

The rating actions follow the company's recent loan amendment and extension. The agency said that it considers the loan amendment and extension to be opportunistic rather than distressed, most importantly because the consenting lenders are expected to receive no less value than the promise of the original securities.

The affirmations reflect the benefits of the loan amendment and extension, which helps alleviate previous concerns regarding Capital Automotive's refinancing and covenant pressures, S&P said.

However, the ratings and negative outlook continue to reflect the agency's expectation for the REIT's auto dealer tenants to remain under pressure into 2010 and for Capital Automotive's financial profile to remain highly leveraged, debt service coverage to remain slim and liquidity to remain constrained.

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