Moody's downgrades FelCor

Moody's Investors Service said it downgraded FelCor Lodging Trust, Inc.'s corporate family rating to B2 from B1 and preferred stock to Caa2 from B3 and FelCor Lodging LP's senior unsecured debt to B2 from B1.

The outlook remains negative.

The agency said the downgrade reflects FelCor's announcement that it has suspended quarterly dividend payments on its series A cumulative convertible preferred stock and series C cumulative redeemable referred stock. Moody's acknowledges that the dividend suspension will help FelCor preserve liquidity but said it views this suspension as an impairment to the preferred shareholders and will view it as a default if FelCor does not pay its cumulative dividends in arrears.

The negative outlook continues to reflect the agency's belief that additional weakening in the lodging segment performance is likely and that FelCor's credit profile will also be deteriorating as a result.

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