Moody’s drops Neiman Marcus, facility, loans

Moody's Investors Service said it downgraded Neiman Marcus Group Ltd., Inc.'s (NMG) corporate family rating to Caa2 from B3, probability of default rating to Caa2-PD from B3-PD, senior secured bank credit facility to Caa1 (LGD3) from B2 (LGD3) and senior unsecured bonds to Caa3 (LGD5) from Caa2 (LGD5).

The speculative grade liquidity rating was affirmed at SGL-2.

The outlook was changed to negative from stable.

"The downgrade of NMG's corporate family rating reflects the continued weakness in its financial results as it faces both the cyclical and secular challenges that face the North America luxury department stores," Moody’s vice president, senior analyst Christina Boni said in a news release.

"Its designation of its MyTheresa.com operations and certain owned properties to unrestricted subsidiaries reduces assets coverage for its debt obligations. The hiring of a financial advisor to evaluate strategic alternatives also signals the likelihood of its capital structure being addressed well before its first significant debt maturity in October 2020. Despite good liquidity, overall leverage levels remain well above what can be refinanced and a path to return to peak EBITDA levels is unlikely in the present operating environment."

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