Moody's introduces new ratings

Moody's Investors Service has introduced two new ratings: probability-of-default ratings and loss-given-default ratings.

The agency's current long-term credit ratings are opinions about expected credit loss that incorporate both the likelihood of default and the expected loss in the event of default. The loss-given-default rating methodology will disaggregate these two key assessments in long-term ratings. The agency said the methodology will also enhance the consistency in its notching practices across industries and will improve the transparency and accuracy of its ratings, as Moody's research shows that credit losses on bank loans have tended to be lower than those for similarly rated bonds.

Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha-numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations.

Loss-given-default assessments (or LGDs) are assigned to individual rated debt issues - loans, bonds and preferred stock - and express Moody's opinion of expected loss as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0%-9%) to LGD6 (loss anticipated to be 90%-100%).

Below is a list of the rating actions for Moody's rated companies, sorted by industry. The rating immediately after the company name denotes the corporate family rating and the percentages next to the LGDs represent the expected loss-given-default rates.

North American retail

BCBG Max Azria Group, Inc., B1; probability-of-default: B1; asset-based revolver, upgraded to Ba2 from Ba3, LGD2, 20%; term loan, B1, LGD3, 48%; third-lien term loan, B3, LGD5, 76%.

Blockbuster Inc., B3; probability-of-default: B3; revolver and term loans, upgraded to B1 from B3, LGD2, 25%; notes, upgraded to Caa2 from Caa3, LGD5, 86%.

Burlington Coat Factory Warehouse, Inc., B2; probability-of-default: B2; term loan, B2, LGD4, 54%; notes, upgraded to B3 from Caa1, LGD5, 73%.

Eddie Bauer, Inc., B2; probability-of-default: B2; term loan, B2, LGD4, 55%;

J. Crew Operating Corp., Ba3; probability-of-default: Ba3; term loan, Ba3, LGD4, 58%.

Movie Gallery, Inc., Caa1; probability-of-default: B3; revolver and term loans, upgraded to B3 from Caa1, LGD3, 41%; notes, upgraded to Caa2 from Caa3, LGD5, 88%.

NBC Acquisition Corp., B2; probability-of-default: B2; discount notes, upgraded to Caa1 from Caa2, LGD6, 93%. Nebraska Book Co., Inc., term loan and revolver, upgraded to Ba2 from B2, LGD2, 21%; subordinated notes, upgraded to B3 from Caa1, LGD5, 76%.

The Neiman Marcus Group, Inc., B1; probability-of-default: B1; senior secured term loan and debentures, upgraded to Ba3 from B1, LGD3, 40%; senior unsecured notes, B2, LGD4, 67%; senior subordinated notes, B3, LGD6, 93%.

Savers, Inc., B2; probability-of-default: B2; term loan and revolver, upgraded to Ba3 from B1, LGD2, 27%; notes, Caa1, LGD5, 87%.

BI-LO LLC, B1; probability-of-default: B2; revolver and term loan, B1, LGD3, 31%.

Roundy's Supermarkets, Inc., B2; probability-of-default: B3; revolver and term loan, upgraded to Ba3 from B2, LGD2, 18%.

Hanesbrands, Inc., Ba3; probability-of-default: Ba3; revolver and first-lien term loan, Ba2, LGD3, 31%; second-lien term loan, upgraded to B1 from Ba3, LGD5, 73%; $500 million senior bank credit facility, downgraded to B2 from B1, LGD5, 89%.

Maidenform Brands, Inc., Ba3; probability-of-default: B1; revolver and term loan, upgraded to Ba2 from Ba3, LGD2, 29%.

St. John Knits International, Inc., B1; probability-of-default: B2; revolver and term loan, B1, LGD3, 31%.

Warnaco Group, Inc., Ba3; probability-of-default: Ba3; revolver and term loan, upgraded to Ba1 from Ba2, LGD2, 22%; notes, B1, LGD5, 78%.

William Carter Co., Ba3; probability-of-default: B1; revolver and term loan, Ba3, LGD3, 32%.

Builders FirstSource, Inc., B1; probability-of-default: B1; revolver, term loan and letter-of-credit facility, upgraded to Ba2 from B1, LGD2, 23%; notes, upgraded to B2 from B3, LGD4, 65%.

The Strober Organization, Inc., B1; probability-of-default: B1; revolver and term loan, Ba3, LGD3, 37%.

AutoNation, Ba1; probability-of-default: Ba1; revolver, term loan and notes, Ba2, LGD5, 84%.

Sonic Automotive, Ba3; probability-of-default: Ba3; revolver, Ba2, LGD3, 31%; subordinated notes, upgraded to B1 from B2, LGD5, 79%; convertible notes, upgraded to B2 from B3, LGD6, 93%.

Affinity Group Holding, Inc., B1; probability-of-default: B1; revolver and term loan, upgraded to Ba1 from Ba3, LGD2, 13%; guaranteed senior subordinated notes, upgraded to B2 from B3, LGD4, 61%; senior notes, upgraded to B3 from Caa1, 90%.

Alimentation Couch-Tard, Inc., Ba1; probability-of-default: Ba1; revolvers and term loans, Ba1, LGD3, 47%; notes, Ba2, LGD5, 81%.

Eye Care Centers of America, Inc., B2; probability-of-default: B2; revolver and term loan, upgraded to Ba2 form B2, LGD2, 22%; notes, Caa1, LGD5, 77%.

General Nutrition Centers, Inc., B2; probability-of-default: B2; revolver, upgraded to Ba2 from B1, LGD1, 4%; term loan, upgraded to Ba2 from B1, LGD2, 13%; senior notes, upgraded to B1 from B3, LGD3, 40%; senior subordinated notes, Caa1, LGD5, 81%.

HVHC, Inc., Ba3; probability-of-default: B1; revolver and term loan, Ba2, LGD2, 26%.

The Jean Coutu Group, Inc., B3; probability-of-default: B3; revolver and term loans, upgraded to B1 from B2, LGD2, 25%; senior notes, B3, LGD4, 57%; senior subordinated notes, Caa2, LGD5, 84%.

Mapco Express, Inc., B2; probability-of-default: B3; revolver and term loan, B2, LGD3, 34%.

Nash Finch Co., B1; probability-of-default: B1; revolver and term loan, B1, LGD4, 54%; convertible notes, B3, LGD6, 91%.

The Pantry Inc., B1; probability-of-default: B1; revolver and term loan, upgraded to Ba2 from Ba3, LGD2, 28%; notes, B3, LGD5, 77%.

Rent-A-Center, Inc., Ba2; probability-of-default: Ba2; revolver and term loans, upgraded to Ba1 from Ba2, LGD3, 32%; notes, Ba3, LGD5, 83%.

Advance Auto Parts, Inc., Ba1; probability-of-default: Ba2. Advance Stores Co., Inc., revolver, term loans and delayed draw term loan, upgraded to Baa2 from Ba1, LGD2, 11%.

CSK Auto, Inc., B1; probability-of-default: B1; term loan, Ba3, LGD3, 39%; convertible notes, upgraded to B3 from B1, LGD5, 81%; notes, B3, LGD6, 97%.

Dollarama Group LP, B1; probability-of-default: B1; revolver and term loans, upgraded to Ba2 from B1, LGD2, 23%; notes, upgraded to B2 from B3, LGD5, 71%.

FTD, Inc., B1; probability-of-default: B1; revolver and term loan, upgraded to Ba2 from Ba3, LGD2, 24%; notes, B3, LGD5, 79%.

Sears Canada, Inc., Ba1; probability-of-default: Ba1; bonds, revolver and term loan, upgraded to Baa3 from Ba1, LGD3, 36%. Sears Holdings Corp., Ba1; probability-of-default: Ba1; revolver, Baa3, LGD2, 24%. Sears DC Corp., notes, downgraded to Ba2 from Ba1, LGD6, 97%. Sears Roebuck Acceptance Corp., notes, downgraded to Ba2 from Ba1, LGD5, 72%.

Toys 'R' Us, Inc., B2; probability-of-default: B2; notes, upgraded to Caa1 from Caa2, LGD6, 93%. Toys 'R' Us - Delaware, Inc., term loans, upgraded to Ba3 from B1, LGD3, 31%; debentures, downgraded to B3 from B2, LGD5, 71%. TRU 2005 RE Holding Co. I, LLC, revolver, downgraded to B3 from B2, LGD5, 71%.

TSA Stores, Inc., B2; probability-of-default: B2; term loan, B2, LGD3, 46%.

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