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Moody’s might downgrade Staples
Moody's Investors Service said it placed both the Baa2 long-term and Prime-2 short term ratings of Staples, Inc. on review for downgrade following the company's announcement that it agreed to be acquired by financial sponsor Sycamore Partners for around $7 billion.
"These rating actions recognize the impact this transaction will have on Staples' capital structure due to the significant levels of new debt that will be necessary to finance the buyout," Moody's vice president Charlie O'Shea said in a news release.
"Assuming the transaction closes as generally outlined, downgrades of multiple notches to speculative grade are likely, and we note that it is very rare for a sponsor-owned company to maintain a rating much above the Ba category."
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