S&P downgrades Titan

Standard & Poor’s said it lowered the corporate credit rating on Titan International Inc. to B from B+.

The agency also said it lowered the rating on the company’s $400 million secured notes due 2020 to B+ from BB-. The recovery rating on this debt is unchanged at 2, indicating 70% to 90% expected default recovery.

The outlook is negative.

The downgrade reflects weaker-than-expected operating performance in recent quarters and an expectation that leverage will remain at more than 6x for the next 12 months, S&P said.

The agency said it now projects debt-to-EBITDA to be about 6.5x in 2015 and decrease to about 5.5x in 2016 as the company offsets weakness in the agricultural and the mining markets with cost-cutting initiatives.

The company’s markets are highly cyclical and somewhat seasonal, S&P said, and it expects the wheel-and-tire industry to remain price-competitive.

The company’s well-established position in the domestic market for off-highway wheels and good position as a specialty-tire supplier should somewhat mitigate the risks from fluctuating demand, the agency said.

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