Standard & Poor's has cut its credit rating on Focus, the private equity-backed DIY retailer, and warned of further downgrades on concerns that it could breach its financial covenants after earnings slumped and leverage soared in the third quarter.

Focus, which is owned by private equity firms Apax Partners and Duke Street Capital, is in negotiations with its lending banks to alter some of its financial covenants to avoid breaching the terms of its loans.