S&P drops Harman

Standard & Poor's said it has lowered its corporate credit rating on Harman International Industries Inc. and the rating on the company's $400 million unsecured notes to B+ from BB+.

The ratings were removed from Creditwatch, where they had been placed with negative implications on April 30, the agency said.

The outlook is stable.

"The downgrade reflects its assumptions that Harman's weak profitability will continue and that the company will use more cash in the next 18 months than we expected for the previous rating because the economic outlook has weakened," said S&P credit analyst Nancy Messer.

S&P noted that it believes Harman's liquidity is limited for now to cash on hand because Harman's revolving bank facility is fully drawn, and the company is prevented from incurring additional debt by a restriction in the $400 million convertible notes held by Kohlberg Kravis Roberts & Co. LP.

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