Four months after acquiring USD185 million in loans, Playboy Enterprises Inc had its debt ratings cut by Standard & Poor's. The corporate credit rating of the men's magazine publisher also went a notch down from B- to CCC+. The grade on its senior-secured debt was also cut to B-.

According to S&P, Playboy's credit ratings would indicate that the company was at risk of violating covenants in its financing pact. Moreover, Playboy might need to curb its interest expense and debt relative to earnings in order to retain access to its USD10 million revolving credit line.

In a telephone interview, S&P credit analyst Daniel Haines had said that Playboy's debt must not exceed 5.8 times its earnings. On the other hand, its earnings must exceed interest expense by at least 2.5 times to remain compliant with the covenant requirements as of Sept. 30.

Data compiled by Bloomberg showed that Playboy reduced its USD185 million first-lien loan maturing in 2017. Refinancing was arranged by Jefferies Group LLC.