Moody's cuts Gibson Guitar

Moody's Investors Service said it downgraded Gibson Guitar Corp.'s corporate family rating to B2 and probability-of-default rating to B3.

Moody's downgraded the $50 million senior secured revolving credit facility due 2012 to B2 (LGD3, 31%) from B1 (LGD3, 30%) and $100 million senior secured term loan B due 2014 B2 (LGD3, 31%) from B1 (LGD3, 30%).

"The downgrade reflects Gibson's continued weakening credit metrics and Moody's expectation that discretionary consumer spending will remain soft throughout 2008," Kevin Cassidy, vice president and senior credit officer at Moody's, said in a written statement.

The negative outlook continues to reflect concern that Gibson may need to revise its senior secured credit facility and amend its covenants, the agency said.

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