Moody's cuts Jack-in-the-Box outlook to negative

Moody's Investors Service said it revised Jack-in-the-Box, Inc.'s outlook to negative from stable.

The agency said that the company's Ba3 corporate family rating, B1 probability of default rating, and Ba3 senior secured ratings were affirmed.

The change in outlook to negative reflects Jack-in-the-Box's exposure to unfavorable discretionary consumer spending trends and high operating costs that will continue to pressure its operating performance as well as the restaurant sector overall, Moody's noted.

This could make it difficult for the company to maintain debt protection measures consistent with its current rating, the agency said, adding that debt protection measures are already considered relatively weak for the current rating. Debt/EBITDA is currently at 4.8 times and close to the 5.0 times that Moody's previously cited as a level that could trigger a negative rating action.

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