Standard & Poor's lowered its ratings on Bombardier Recreational Products from B-minus to CCC-plus.
The ratings agency said it reduced the rating because of BRP's plan to buy back up to $250 million of its term debt at a discount, according to a recent report in the Canadian Press. S&P said it believes bondholders would only accept a substantial discount if they have doubts about receiving full payment on obligations, even though the term debt is secured.
BRP says it is trying to raise between $40 million and $80 million of new capital to reduce its overall debt. The company said in a statement that this "is not a distressed debt offer" and that S&P's decision "is based on overly rigid guidelines that do not appropriately incorporate BRP's particular situation."
Last month, S&P lowered BRP's long-term corporate credit rating to B-minus from B. S&P also lowered the company's rating on the $790 million (U.S.) senior secured term loan due 2013 to B-minus from B.
Standard & Poor's issues ratings from AAA, the highest, to D, which means payment is in default.