NEW YORK (AP) ¿ Moody's Investors Service on Monday lowered American Railcar Industries Inc.'s corporate family rating and its probability of default ratings.
The ratings agency downgraded the St. Charles, Mo.-based company's corporate family rating to "Caa1" from "B2" and its default rating from to "B3" from "B2". It also rated the company's $275 million senior unsecured notes to "Caa1" from "B3." All of the ratings are non-investment grade, or "junk."
Moody's assigned the company a negative outlook.
The ratings agency said it believes the company's prospects for defaulting are low in the near term, but absent a recovery in market conditions, and as American Railcar's notes mature, the probability for default is likely to increase.The corporate family rating reflects Moody's assessment that in the event of a default recovery, the company will be substantially restricted by weak prospects of its railcar manufacturing, which are likely to exist over the next 12 to 18 months. "The negative ratings outlook reflects concerns that a prolonged period of weakness in the rail car sector will likely result in a period of dramatically weaker revenues and operating losses," said Moody's.