S&P: Continental Alloys on watch

Standard & Poor's said it placed its ratings on Continental Alloys & Services Inc., including its B- corporate credit rating, on Creditwatch with negative implications.

"The Creditwatch listing reflects its assessment that operating results and credit measures are likely to weaken materially in the near term because of weak end-market demand for the company's products," said credit analyst Sherwin Brandford.

Reduced drilling activity in North America is the primary reason for the decline in demand, the agency said, noting that it expects the debt to EBITDA ratio for Continental to increase to around 5x.

As a result, the agency said it does not believe the company will be able to remain in compliance with the leverage covenant governing its existing bank credit facility.

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