S&P sinks Service Properties

S&P said it lowered Service Properties Trust to BB+ from BBB-.

The company’s bonds remain BBB-. The agency assigned a 2 recovery rating to the bonds.

“We believe Service Properties Trust (SVC) will face material top-line headwinds over the next several quarters as the fallout from the coronavirus pandemic likely leads to a global recession that has a significant negative effect on the cyclical lodging sector, which will pressure the company's operating performance and its ability to complete its expected asset sales to restore its credit protection measures,” the agency said in a news release.

S&P also placed all of the ratings on SVC on CreditWatch with negative implications.

“The CreditWatch reflects our view that the company could exhaust its security deposits on several hotel agreements, which would expose it to a material deterioration in its credit metrics if the occupancy pressure stemming from the coronavirus pandemic persists for more than a few months,” S&P said.

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