Moody's cuts Norcraft notes to B2

Moody's Investors Service said it lowered the proposed 10½% second priority senior secured notes due 2015 issued by Norcraft Cos., LP to B2 (LGD3, 44%) from B1 (LGD3, 38%) and its 9% senior subordinated notes due 2011 to Caa1 (LGD5, 84%) from B3 (LGD5, 73%).

The agency affirmed Norcraft Holdings, LP's corporate family and probability-of-default ratings at B2 and its 9¾% senior unsecured discount notes due 2012 at Caa1.

The outlook is stable.

The downgrades of the proposed 10½% senior secured notes due 2015 and the 9% senior subordinated notes due 2011 result from revised expectations, according to the agency.

Norcraft Cos. has increased the size of its proposed senior secured notes offering by $30 million to $180 million, and Norcraft Holdingsis increasing the tender offer for its 9¾% senior unsecured discount notes due 2012 by $29.3 million to $64.3 million, the agency noted.

The B2 corporate family rating incorporates the view that Norcraft will be affected by uncertainties in new home construction and residential repair and remodeling end markets, the agency said.

The rating also reflects weak credit metrics over the near term.

Moody's said it also recognizes the company's solid operating margins and its sound business model.

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