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Monday, 16 July, 2001, 20:19 GMT 21:19 UK
Sotheby's downgraded to junk status
A Sotheby's auction room
Sotheby's has been beset by legal problems
In a blow to its prestigious image, auction house Sotheby's has had its debt rating downgraded to "junk" status.

Credit-rating agency Standard & Poor's (S&P) cut the auctioneer's long-term corporate credit and senior unsecured debt ratings two notches to BB-plus.

This rating officially makes Sotheby's debt into junk bonds - a class of debt considered too risky for many investors to hold.

S&P said that a price-fixing probe into the auction business had caused art buyers and sellers to become "less aggressive" over the last couple of years, and that US economic and stock market weakness may leave auction participants "relatively reluctant" in the foreseeable future.

The downgrade is likely to make it more expensive for Sotheby's to raise money in the financial markets.

S&P said it may change its ratings, depending on whether Sotheby's resolves its ownership status.

The auction business is currently in the grip of mild merger mania.

Last week Phillips confirmed plans to merge its UK operations with those of rival firm Bonhams & Brooks, creating a third force to rival the long-standing duopoly of Sotheby's and Christies.

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13 Jul 01 | Business
Auction houses merge
30 Jan 01 | Americas
Auction house cases dropped
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