Moody's downgrades Home Interiors

Moody's Investors Service said it lowered the long-term debt ratings of Home Interiors & Gifts Inc. by one notch and assigned a negative outlook.

More specifically, Moody's downgraded the senior implied rating to B3 from B2; the $50 million five-year senior secured revolving credit facility due March 31, 2009 to B3 from B2; the $315 million seven-year senior secured term loan due March 31, 2011 to B3 from B2; the $149.1 million 10.125% senior subordinated notes due June 1, 2008 to Caa2 from Caa1; and the senior unsecured issuer rating to Caa1 from B3.

Moody's said the downgrade reflects Moody's expectation that the company's sales and earnings will remain under pressure through the current holiday season and into 2005 due to challenging macroeconomic and industry trends. As such, the company's credit profile, with constrained financial flexibility and limited debt repayment capacity, is no longer consistent with a B2 senior implied rating.

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