(Bloomberg) — Geo Group Inc.’s standing in the credit market took another hit Tuesday, after S&P Global Ratings cut the company’s rating for the second time in two months amid growing U.S. reluctance to use private prisons.

S&P cited the increased risk of a distressed debt exchange as it lowered Geo by two notches to CCC+, or seven steps into junk territory. The move follows Geo’s disclosure that it hired financial advisers to assess its options and head off a potential cash crunch.

Weakening operating conditions and “unsupportive capital markets” will make it harder for Geo to refinance its debt and make a default more likely, S&P said in a note Tuesday. Geo’s closest maturity is $279 million of bonds that come due in April 2023.

The company and some of its lenders are gearing up for discussions about how to restructure its nearly $3 billion debt load. Creditors expect talks to focus on pushing out maturities for Geo’s 2024 term loan or its unsecured 2026 bonds, Bloomberg previously reported. Some of those notes trade for less than 70 cents on the dollar.

Read more: Geo Group Lenders Prep for Debt Talks With Prison Operator

Management has already taken steps to build cash with measures that included drawing down almost all of Geo’s credit line and suspending dividends. The strategy is a strong indicator that a debt exchange is coming, according to S&P.

Geo and its main rival CoreCivic Inc. are facing a cash crunch after major banks disclosed plans to stop lending to the industry and as money managers put more emphasis on environmental, social and governance criteria in their investment selection.

Both companies are also contending with growing political pressure. The industry suffered a major blow in January, when President Joe Biden ordered the Justice Department not to renew contracts with private prison operators.

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