S&P downgrades Reichhold

Standard & Poor's said it lowered Reichhold Industries Inc.'s corporate credit rating to B from BB- and its $195 million senior unsecured notes due 2014 to B- with an unchanged recovery rating of 5 from B+.

The outlook is stable.

The agency said the downgrade follows Reichhold's subpar third-quarter 2008 operating results - which reflect lower volumes from both of its segments and raw material cost increases that exceeded price increases - and S&P's expectation that the fourth quarter could be materially weaker.

The ratings on Reichhold reflect the company's highly leveraged financial profile, low operating margins and cyclical, competitive markets, S&P said.

Reichhold's meaningful market positions in its resins product lines, significant geographic diversity of sales, satisfactory liquidity and management's commitment to reduce debt-like obligations temper these weaknesses, the agency said.

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