S&P lowers Charlotte Russe

S&P said it lowered its corporate credit rating on Charlotte Russe Inc. to CCC- from CCC+. The outlook is negative.

At the same time, S&P lowered the issue-level ratings on the first-lien debt to CCC- from CCC+. The 4 recovery rating on the term loans reflects an expectation for average (30% to 50%; rounded estimate: 30%) recovery in the event of default.

“The downgrade reflects our view that the probability of financial restructuring, including at least some of the company's debt obligations, at less than par is likely within the next six months. This view reflects the company's sizable term loan obligations that mature in May 2019, and our belief that the company lacks prospects for a strong, sustained rebound amid an increasingly competitive specialty apparel environment,” S&P said in a news release.

“In addition, we note the reportedly very low pricing indications of the company's term loans. We believe capital market access for the company could be restricted given reduced investor appetite for distressed retailers.”

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