S&P upgrades Merrill Corp.

Standard & Poor's said it raised its corporate credit rating on Merrill Corp. to CCC from SD. The outlook is developing.

At the same time, S&P raised its issue-level rating on subsidiary Merrill Communications LLC's first-lien term loan to CCC (at the same level as the corporate credit rating) from D. The recovery rating on the loan remains unchanged at 3, indicating S&P's expectation for meaningful (50% to 70%) recovery for lenders in the event of a payment default.

In addition, S&P affirmed its other outstanding ratings on Merrill Communications debt.

"The CCC corporate credit rating reflects our expectation for continued weakness in Merrill's operating performance through the remainder of the year and further deterioration in credit measures," said S&P credit analyst Michael Listner in a news release.

"Although we expect some degree of moderation in the company's deteriorating operating trends, we believe Merrill's exposure to volatile, niche markets will result in a more prolonged period for the company to report a meaningful recovery in operations relative to larger competitors serving a more diversified market base."

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