...- We believe demand for YS Garments LLC (d/b/a Next Level Apparel), which provides undecorated fashion basics to the U.S. wearable promotional products industry, could significantly decline over the next several months because of corporate and other event cancellations related to the COVID-19 pandemic. - While we estimate Next Level's leverage was under 4x at the end of 2019--at least 1x below our 5x downgrade threshold--we believe the company is vulnerable to a significant near-term drop in demand that could spike leverage above its covenant levels, which step down to 4.75x in the second quarter and 4.5x in the fourth quarter. - As a result, we are lowering the rating on Next Level to 'B-' from 'B'. We are also lowering the issue-level rating on Next Level's debt to 'B-', reflecting the issuer downgrade. - The negative outlook reflects the risk of a downgrade if event cancellations continue for a prolonged period and demand for promotional products falls significantly, leading to a significant...
