Moody's downgrades Matalan

Moody's Investors Service said it lowered to B2 from B1 the corporate family rating and probability of default rating of Missouri TopCo Ltd. (Matalan).

The outlook remains negative.

The action follows the further downward revision of the company's EBITDA guidance for fiscal year 2012, Moody's said.

Moody's also said it lowered Matalan Finance plc's senior secured rating to Ba3 (LGD 2) from Ba2 and its senior unsecured rating to Caa1 (LGD 5) from B3.

In light of the company's revised guidance for earnings, the company's key metrics will no longer be commensurate with the previous B1 rating, the agency said, notably for gross leverage not to exceed 6x.

Moody's also said it expects that the earnings trend will further reduce headroom under financial covenants for the revolving credit facility, which could result in downward pressure on the rating.

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