S&P: Fender outlook negative

Standard & Poor's said it revised its outlook on Fender Musical Instruments Corp. to negative from stable and affirmed its B corporate credit rating and the B issue-level rating with a recovery rating of 3 on Fender's senior secured debt.

The agency said the revised outlook reflects the deterioration in the company's credit metrics due to a material increase in its backlog and declines in revenue and margin following a supply disruption as well as S&P's expectation that the credit metrics will remain weak over the next six to nine months.

The B rating on Fender reflects its highly leveraged financial risk profile, its participation in the challenging musical instruments industry, its narrow business focus and the discretionary nature of its product, S&P said.

Positively, Fender maintains strong brand recognition, the agency said.

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