S&P downgrades QTC

Standard & Poor's said it lowered QTC Management Inc.'s corporate credit rating to B from B+ and its $15 million first-lien revolving credit facility and $140 million senior secured term loan due 2012 to B from B+ with 3 recovery rating.

The action reflects concern regarding tightening covenant levels in 2009, the agency said.

"While the company's base business has been performing within expectations and continues to generate free cash flow, significant covenant step-downs in the credit agreement may challenge the company to loosen these financial constraints in a difficult lending environment," S&P analyst Alain Pelanne said in a statement.

The outlook is negative.

The rating reflects the company's vulnerabilities tied to its narrow business focus, heavy reliance on three government agency customers and aggressive financial risk profile, according to the agency.

These factors are partly offset by its established positions with several key government agencies, strong margins and scalable business model, the agency noted.

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