Moody's downgrades Hudson

Moody's Investors Service said it lowered Hudson Product Holdings, Inc.'s corporate family and probability-of-default rating to B3 from B1 and its $30 million first-lien revolving credit facility and $220 million first-lien term loan B to B1 (LGD3, 31%) from Ba3 (LGD3, 30%).

The outlook remains negative.

The agency said the downgrade reflects the decline in Hudson's backlog, limited visibility into its near-term bookings and earnings prospects and increasing financial leverage.

The negative outlook reflects Moody's view that depressed demand for Hudson's heat-exchange products will exert pressure on margins, leverage and the company's liquidity profile over the near term. The agency also expects reduced earnings coupled with the contractual tightening of covenants, set to occur in December, to challenge covenant compliance.

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