Moody's downgrades Masco

Moody's Investors Service said it downgraded Masco Corp.'s corporate family and probability-of-default ratings to Ba2 from Ba1, lowered its senior unsecured notes to Ba2 (LGD4, 53%) from Ba1 (LGD4, 54%) and raised its speculative-grade liquidity rating to SGL-2 from SGL-3.

This concludes the review begun on Feb. 12, and the outlook is negative.

The agency said the downgrade of the corporate family rating reflects weak demand in the company's business segments and the company's inability to lower costs fast enough to offset the sales decline. The Ba2 rating also considers the multi-year trend in increasing debt-to-capitalization, due in part to share buybacks and dividends during the recent homebuilding boom.

Masco's scale and strong market positions across a number of building products segments balance against near-term weaknesses, Moody's said.

The upgraded speculative-grade liquidity rating reflects the more than $2 billion of revolver availability and cash as well as the room under the company's renegotiated covenants and its alternative sources of liquidity.

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