PetSmart Inc. has announced that it has entered into a definitive agreement to be acquired by a consortium led by BC Partners Inc. We believe such a sale will increase PetSmart's debt substantially and weaken its credit-protection measures, with leverage likely rising to more than 5x. As a result, we have placed our 'BB+' corporate credit rating on PetSmart on CreditWatch negative. A downgrade to the 'B' category is likely given our expectations for post-transaction credit metrics; an interim downgrade is also possible. On Dec. 15, 2015, Standard&Poor's Ratings Services placed its 'BB+' corporate credit rating on pet retailer PetSmart Inc. on CreditWatch with negative implications. The CreditWatch placement follows PetSmart's announcement that it has entered into a
