S&P lowers Roundy's

Standard & Poor's said it lowered Roundy's Supermarkets Inc.'s corporate credit rating to B from B+ and placed ratings on CreditWatch with negative implications.

The downgrade reflects concern that the weak results in the second quarter increase the likelihood that Roundy's will breach financial covenants of its senior secured credit facility in the coming quarters, according to the agency.

Roundy's still has some excess cash on its balance sheet and has historically generated positive free cash flows which may allow it to remain covenant compliant in the next couple of quarters, the agency noted.

If the declines in operating performance extend into 2009, however, or intensify in the third and fourth quarters, the company will likely breach its consolidated senior leverage ratio covenant, S&P said.

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