S&P downgrades Ion Geophysical outlook to negative

Standard and Poor's Rating Services downgraded the outlook for Ion Geophysical Corp. to "Negative" from "Stable due to expectations of a weakening seismic market.

Given the decline in commodity prices and a sharp pull back in capital projects and news that the company expects to miss fourth-quarter revenue expectations, the company could face substantial challenges in 2009, said S&P analyst Aniki Saha-Yannopoulos.

Saha-Yannopoulos also affirmed the company's junk grade corporate credit rating of "BB-" due to the company's "vulnerable business risk profile," which is based on the volatile seismic market and the company's small scale compared with competitors. The company also faces tight liquidity and a stringent covenant package associated with its bank facilities. These drawbacks are somewhat offset by low debt leverage and limited capital requirements, Saha-Yannopoulos added.

Shares of Ion Geophysical rose 9 cents, or 5 percent, to $1.90 in Friday afternoon trading.