S&P downgrades Emeco

Standard & Poor’s said it lowered the corporate credit rating on Emeco Holdings Ltd. to B- from B.

The agency also said it lowered the senior secured debt issue rating to B- from B. The recovery rating remains at 3.

The outlook is negative.

The downgrades reflect the ongoing challenging industry conditions in the mining services sector and a view that the prolonged weakness in commodity prices will continue to place downward pressure on the markets in which Emeco operates, S&P said.

As a result, the agency said it expects Emeco’s earnings and margins to remain pressured, which translates into sustainably weaker credit metrics.

The ratings also consider Emeco’s small size relative to more diversified equipment rental providers, S&P said.

Although Emeco does not take direct commodity price risk as a mining equipment rental company, it is indirectly exposed to the depressed commodity price environment that is adversely affecting the mining industry as a whole, the agency said.

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