S&P downgrades Evertec

S&P said it lowered the corporate credit rating on Evertec Group LLC to B+ from BB- and placed the rating on CreditWatch with negative implications.

The agency also said it lowered the rating on the company's senior secured bank credit facility to B+ from BB- and placed it on CreditWatch negative.

The recovery rating remains at 3, indicating 50% to 70% expected default recovery.

The downgrades and CreditWatch placement reflect the risk that revenue and EBITDA could decline over the next year from lower economic growth and transaction processing volume after Hurricane Maria's landfall in Puerto Rico, where EVERTEC generated 84% of its revenue in 2016, S&P said.

As of June 30, adjusted leverage was about 3.6x, the agency said, and it is likely that Evertec's leverage will increase to over 4x over the next 12 months.

S&P said it will monitor the extent of damage the hurricane has on the company and Puerto Rico's economy and infrastructure, including the impact on merchants, consumers, financial institutions and the Puerto Rican government.

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