Erickson Bonds Sink After S&P Lowers Rating on Declining Demand

Bonds of utility aircraft maker Erickson Inc. plunged after the company’s debt rating was cut to CCC+, or seven levels below investment-grade by S&P Global Ratings.

The company’s $355 million of 8.25 percent second-lien notes due in 2020 declined to 45.75 cents on the dollar on Thursday at 3:05 p.m. in New York, according to Trace, the bond price reporting system of the Financial Industry Regulatory Authority. That’s down from 54.25 cents last week. The notes yield more than 34 percent, up from 28.24 percent last week.

S&P downgraded both the company’s corporate credit rating and the bonds’ grade to CCC+ from B- on May 31, saying declining demand has hurt the company’s revenue and earnings. The ratings company warned that it may lower the rankings further next year if “the company’s liquidity remains pressured.”

Terrence Dwyer, an analyst at KDP Investment Advisors, downgraded the bonds to hold from buy last week, saying that while Erickson has signed deals to work with the State of Alaska, National Aeronautics and Space Administration and the U.S. Department of Defense, it hasn’t found new business to replace contracts in Afghanistan.

Moody’s Investors Service cut its rating on the company to Caa1, from B2, in April. It downgraded the bonds to Caa2 from B3.

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