Moody's downgrades L Brands

Moody's Investors Service said it downgraded all ratings of L Brands, Inc., including its corporate family rating to B1 from Ba3 and its probability of default rating to B1-PD from Ba3-PD.

The agency also downgraded the company's senior unsecured guaranteed notes to B1 from Ba3 and the senior unsecured unguaranteed notes to B3 from B2. The speculative grade liquidity rating was lowered to SGL-3 for SGL-2.

The ratings were placed on review for further downgrade.

"The downgrade reflects that the completion of the spinoff of Victoria's Secret is at significant risk and is certainly delayed as Sycamore Partners delivered notice to terminate the sale of a 55% interest in Victoria's Secret," said Christina Boni, a Moody’s vice president, in a press release.

"The company's litigation of the termination notice may not be successful or may result in less favorable terms. Also, the delay in the potential closing will increase L Brands cash burn as its works on a turnaround at the Victoria Secret brand in the midst of the disruption posed by Covid-19," Boni added.

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