S&P Global Ratings lowered the debt ratings of Belk Inc. as the department store chain missed the interest payment due on its second-lien term loan and the scheduled amortization payment due on its first-lien term loan.

The debt rating was lowered to D From CC.

S&P wrote in a brief statement, “The downgrade reflects Belk’s missed interest and amortization payments and anticipated Chapter 11 restructuring. We expect Belk’s debt service obligations to continue accruing prior to the completion of its proposed Chapter 11 restructuring, which we believe it will complete around the end of February 2021. We anticipate the company will reduce its funded debt by approximately $450 million and halve its annual cash interest burden to about $75 million through the restructuring.”

Photo courtesy Belk