MOODY’S DOWNGRADES KMART CREDIT RATING
NEW YORK — Moody’s Investors Service doesn’t believe Kmart’s financial performance has bottomed out yet and moved down its credit rating below investment grade, completing a review that began on Nov. 6.
The downgrade affects $4.7 billion of debt, Moody’s said, and resulted from “the decline in credit protection measures and the continuing challenge that the company faces in obtaining benefits from its turnaround initiatives and converting these benefits into substantial improvements in sales, profitability and cash flow generation.”
In addition, Moody’s said the downgrade also reflects the possibility that it may be some time before internal performance and external market conditions improve significantly. Kmart’s senior unsecured debt, medium-term notes, issuer rating and senior implied rating were all moved to Ba2 from Baa3, lowering them to speculative grade from investment grade.