Sotheby's S&P Rating Gets a Boost

Although this new release is a bid dated from August 17, it is a slow period and I have not been able to locate any decent market news.  Standards and Poor's Ratings Service bumped the rating of Sotheby's up two levels, now almost at investment grade level.  The increase is based on the strong second quarter results.  The upgrade still may be shaky, as the economic recovery, if you can call it that continues to struggle.


Standard & Poor's Ratings Services gave a two-notch boost to Sotheby's (BID), putting the auction house on brink of investment-grade territory, citing its "recent strong performance."

The upgrade came two weeks after Sotheby's reported its soaring second-quarter profit on rebounding sales in an improved auction-market environment.

Analyst Charles Pinson-Rose, while noting "volatile worldwide demand for art can lead to large swings in operating performance, credit ratios, and cash flows," said the new BB+ rating reflected S&P's view that "the risks are somewhat offset" as the company's performance "exceeded our expectations in the past year."

S&P had predicted a rebound after a very weak auction market in the last two years. Its ratings outlook on Sotheby's is stable.

S&P moved Sotheby's from BB- to BB+. The outlook is stable; it was raised to positive in March. The ratings agency said an upgrade to investment-grade territory might be "constrained" if "a significant decline in global capital market" occurs, which it said would increase the volatility in the company's results.

Moody's Investors Service last week upgraded Sotheby's, with its rating one step below S&P's new grade, on the "significant improvement" in credit metrics due to a rebounding auction market.

Shares were up 2.1% to $29.54 in recent trading. The stock has risen 31% this year.

No comments: