Moody's lowers Libbey Glass

Moody's Investors Service said it downgraded Libbey Glass Inc.'s corporate family and probability-of-default rating to B3 from B2 and its second-lien senior secured notes due 2012 to B3 (LGD4, 55%) from B2. The SGL-3 speculative-grade liquidity rating is unchanged.

The ratings were placed on review for further possible downgrade.

The agency said the downgrade reflects the company's weak operating performance and credit metrics as a result of the challenging macroeconomic environment as well as Moody's expectation that weaker consumer spending will likely continue to pressure results through at least the first half of 2009.

The SGL-3 rating reflects adequate liquidity, supported by the expectation that planned cash flow improvement, moderate cash balances and availability under Libbey's asset-based revolver should be sufficient to fund internal needs over the next 12 months, Moody's said.

The review for possible downgrade will focus on Libbey's ability to stabilize earnings declines and improve cash flow through recently announced initiatives in a very challenging economic environment, the agency said.

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