S&P: Fender on positive watch

Standard & Poor's said it placed Fender Musical Instruments Corp.'s B corporate credit rating on CreditWatch with positive implications.

The CreditWatch placement follows news that Fender has commenced its initial public offering, S&P said.

The agency said it believes the company will use a substantial portion of the proceeds to repay a portion of the term loan due 2014, which will likely result in improved credit measures.

Fender's financial risk profile is currently considered highly leveraged and its business risk profile is considered weak, S&P said.

The agency said it believes the expected improvement in credit metrics following the expected term loan reduction could result in improved credit metrics.

Key credit factors in the assessment of Fender's business risk profile include its narrow business focus, customer concentration, the discretionary nature of its products and the highly competitive musical instruments industry in which it operates, S&P said.

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