S&P lifts Ethan Allen

Standard & Poor's said it raised its corporate credit rating on Ethan Allen Interiors Inc. to BB- from B+.

The issue-level rating on the company's senior unsecured notes remains a BB-, while the recovery rating was revised to 3 from 2. While a 3 recovery rating generally reflects an expectation of recovery in the 50% to 70% range in the event of default, S&P said recovery analysis suggests much higher recovery for Ethan Allen's notes.

However, given the change in corporate credit rating to BB-, the agency said it caps the recovery rating for the unsecured notes at 3 because the company has the potential to incur secured debt in a distressed situation.

Key credit factors in Ethan Allen ratings include the company's good brand awareness, strong retail distribution network, exposure to the highly competitive residential furnishings industry and vulnerability to reduced discretionary spending in an economic downturn, S&P said.

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