Moody's cuts Leggett & Platt

Moody's Investors Service said it downgraded Leggett & Platt, Inc.'s long-term rating to Baa1 from A3, concluding a review for downgrade initiated on May 12.

The downgrade reflects Moody's expectation of lower operating and free cash flow for the foreseeable future due to the continued weakness in discretionary consumer spending, notably in residential and automotive, which comprises about half of the company's product mix, the agency said.

The Prime-2 rating for commercial paper is affirmed and the outlook is stable, the agency noted, adding that cash flow coverage measures have trended down in 2009, although they have benefited from the monetization of working capital.

"Although Moody's expects Leggett's cash flow credit metrics to improve in the medium term from current levels, the agency said it believes that they will not return to levels consistent with an A3 rating," said Kevin Cassidy, senior credit officer at Moody's.

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