Moody's drops Lufthansa to junk

Moody's Investors Service said it lowered the long- and short-term issuer ratings of Deutsche Lufthansa AG to Ba1/Not-prime from Baa3/Prime-3. The agency assigned corporate family and probability-of-default ratings of Ba1.

The outlook is stable.

The action reflects very weak market conditions, which will weaken credit metrics with the issuer unlikely to maintain a debt-to-EBITDA ratio below 3.5x, according to the agency.

Lufthansa's strong liquidity profile continues to be a supporting factor of its rating, the agency said.

The rating of the senior unsecured notes at Ba1 (LGD4, 52%) reflects the limited amount of structural subordination of the notes within the company's capital structure, Moody's said.

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