S&P downgrades DJO

Standard & Poor's said it lowered the rating on the second-priority senior secured notes co-issued by DJO Finance LLC and DJO Finance Corp. to B- from B.

The issuers are subsidiaries of DJO Global Inc., a manufacturer of medical devices.

The agency said it lowered the rating on this second-lien debt because the size of the debt class will increase significantly relative to the estimate of DJO's value in the event of default.

The agency said it revised the recovery rating on this debt to 3, indicating 50% to 70% expected recovery in a default, from 2, indicating 70% to 90% expected recovery in a default.

S&P also said it assigned a CCC+ rating to the proposed $440 million senior notes to be co-issued by DJO Finance LLC and DJO Finance Corp.

The agency also assigned to these new notes a recovery rating of 5, indicating 10% to 30% expected recovery in a default.

The proceeds of the new notes and a $100 million add-on to their second priority notes will be used to redeem DJO's 10 7/8% senior unsecured notes and repay about $50 million of revolving credit borrowing.

The ratings are unaffected by the refinancing, S&P said.

The transactions will improve DJO's liquidity by substantially eliminating mandatory debt amortization before 2016 and restoring nearly full availability of DJO's revolving credit facility, the agency said.

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