Moody's cuts American Greetings

Moody's Investors Service said it lowered American Greetings Corp.'s corporate family and probability-of-default ratings to Ba3 from Ba2, senior unsecured notes rating to B1 (LGD5, 75%) from Ba3 (LGD5, 77%) and confirmed the senior secured debt instrument ratings at Ba1 (LGD2, 22%).

The outlook is stable.

The action reflects the company's weakening credit metrics alongside integration and economic challenges, the agency said.

The confirmation of the Ba1 senior secured rating reflects the still significant junior debt in the capital structure, the agency noted.

American Greetings' Ba3 corporate family rating reflects the significant business risks inherent in the greeting card industry, which is characterized by low or declining growth rates, weak consumer branding, strong competition and vulnerability to its stronger retail customers and its ongoing consolidation, the agency said.

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