S&P downgrades Emeco

Standard & Poor’s said it lowered the corporate credit rating on Emeco Holdings Ltd. to B from B+, along with the rating on its senior secured debt issue to B from BB-.

The recovery rating on the senior secured debt issue also was lowered to 3 from 2.

The outlook is negative.

The prospect of a quick recovery in Emeco’s credit metrics, which was factored in the previous rating, has now significantly diminished due to weak operating conditions stemming from prolonged weakness in commodity prices, S&P said.

The decreased demand for Emeco’s services is expected to continue to pressure its operating margins and earnings, the agency said.

The tough trading conditions also are reducing the value of equipment that is being transacted in the secondary market, which could affect Emeco’s ability to realize good prices from asset disposal, S&P said.

The agency also said it recognizes Emeco’s leading position in Australia and its good-quality asset base.

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