Moody's downgrades Arias

Moody's Investors Service said it downgraded Arias Acquisitions, Inc.'s corporate family rating and senior secured bank credit facilities to B3 from B2, downgraded its senior subordinated notes to Caa2 from Caa1 and changed the outlook to negative from stable. Arias is an intermediate holding company owned by HBW Holdings, Inc.

The agency said the downgrade reflects HBW's weak operating performance over the past year, driven mainly by financial problems at an unaffiliated insurance company with whom HBW placed construction general liability coverage on behalf of home builders, and a general softening of the U.S. housing market.

Arias is seeking to amend its loan agreements to ease its financial covenants. Moody's said it believes that, absent such an amendment, Arias will likely trip a leverage covenant in the near term. Therefore, failure to amend the loan agreements could lead to a further downgrade of its ratings.

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