Standard & Poor’s Ratings Services said Wednesday that it lowered its corporate credit rating on New York City-based Finlay Enterprises Inc., and its wholly owned subsidiary Finlay Fine Jewelry, to ‘SD’ (selective default) from ‘CC’. It also lowered the issue-level rating on Finlay’s 8 3/8 percent senior notes due June 2012 to ‘D’.

At the same time, the rating service removed the ratings from CreditWatch with negative implications, where they were placed on Nov. 17. In addition, it withdrew its recovery rating on the senior notes.

The downgrade reflects the company’s announcement that it has received consent and waivers with respect to the $162.8 million aggregate principal amount, or 81.4 percent, of the senior notes. S&P Ratings Services noted on Nov. 17 that it considered the offer a distressed exchange and, as such, tantamount to a default. The rating actions today reflect effective completion of the tender offer.

“We will continue to rate Finlay,” said Standard & Poor’s credit analyst David Kuntz, “and could raise the rating back to the ‘CCC’ category, depending on our assessment of the company’s new capital structure and liquidity profile.”

JCK