Moody's cuts Guitar Center view to negative

Moody's Investors Service said it changed the outlook of Guitar Center Holdings, Inc. to negative from stable.

In addition, Moody's affirmed all of Guitar Center's existing ratings, including its corporate family rating of Caa1, probability of default rating of Caa1 and speculative grade liquidity rating of SGL-3.

The change in outlook to negative from stable reflects the approaching expiration of Guitar Center's ability to defer paying cash interest on its $375 million holdco senior notes in October 2010 (first interest payment due in April 2011).

"While we expect Guitar Center to have sufficient cash reserves to fund its interest expense, the company's ratings could be downgraded if it is unable to improve its operating performance from current weak levels," stated Maggie Taylor, senior credit officer at Moody's, in a news release.

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