S&P downgrades Trojan Battery

S&P said it lowered the corporate credit rating on Trojan Battery Co. LLC to B from B+.

At the same time, the agency downgraded the issue-level rating on the company's senior secured credit facility to B from B+. The 3 recovery rating remains, indicating an expectation for meaningful recovery (50%-70%; rounded estimate: 50%) in the event of a payment default.

Finally, S&P placed all of Trojan’s ratings on CreditWatch with negative implications.

S&P said the downgrade reflects the declining covenant cushion under the company's net leverage covenant. Trojan's cushion under the net leverage covenant on its senior secured credit facility decreased from over 15% as of Aug. 31, 2016, to just under 10% as of Feb. 28, 2017, due to step-downs in the leverage covenant and the company's weaker-than-expected profitability in the first half of fiscal-year 2017, the agency explained.

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