S&P could lower Westway

S&P said it placed its B+ project rating on Westway Group LLC on CreditWatch with negative implications.

The recovery rating is unchanged at 3, which indicates expectations of meaningful (50%-70%; lower end of the range) recovery if a default occurs.

S&P said the CreditWatch placement stems from the recent breach of Westway's leverage covenant. As of June 30, Westway was unable to meet its covenant of 5.25 times, with its leverage (by the issuer's calculation) at 5.65 times. The debt service ratio exceeded the test amount of 2.25 times, with some headroom based on the sponsor's calculations.

"The CreditWatch placement reflects the recent breach of the project's leverage covenant. This could potentially lead to weaker ratings as a result of diminished covenant headroom or weaker debt service coverage ratios, as well as heightened refinancing risk," S&P credit analyst Michael Ferguson said in a news release.

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