S&P cuts Associated Asphalt

S&P said it lowered its ratings on Associated Asphalt Partners LLC and its senior secured term loan to CCC from CCC+. The loan’s 3 recovery rating (65%) is unchanged.

“The downgrade reflects our expectation that AA may face difficulty refinancing the upcoming maturity of its term loan B, which is due within 12 months. In our view, the company will not have sufficient liquidity to repay the loan in 2024. As of March 31, 2023, AA had approximately $400,000 cash on hand. Additionally, if the term loan B is not refinanced at least six months before its maturity date, the asset-based lending (ABL) facility maturity will accelerate to Dec. 5, 2023,” S&P said in a statement.

On the plus side, “We expect AA will pursue refinancing before the maturity date, though the timing is uncertain and subject to market conditions. We continue to expect AA to continue to generate strong margins due to strong demand and a supportive commodity price environment,” the agency noted.

The ratings remain on developing watch.

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