Moody's downgrades Clorox

Moody's Investors Service said it downgraded Clorox Co.'s senior unsecured debt rating to Baa2 from Baa1 but affirmed the company's short-term debt rating at Prime-2. The action concludes a review for downgrade that began on Oct. 31.

The outlook is stable.

According to Moody's, the downgrade reflects the recent deterioration in Clorox's credit metrics resulting from debt incurred to acquire Burt's Bees for $938 million in cash.

"We believe debt reduction will be a priority for Clorox, however, its financial flexibility will be significantly more limited following the acquisition of Burt's Bees," Moody's vice president Janice Hofferber said in a written statement.

Clorox's Baa2 senior unsecured debt rating reflects the company's leading market positions in most of its midsized product categories, strong brand name recognition, product innovation and steady revenue growth, the agency said.

These factors are tempered by the proliferation of new products, the intense competition for global market share growth, somewhat limited diversity of sales, potential for volatility in its Latin American segment and exposure to volatile raw material and energy prices, Moody's said.

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