S&P lowers Office Depot

Standard & Poor's said it lowered Office Depot Inc.'s corporate credit rating to B from BB- and its $400 million of senior unsecured notes due 2013 to B- from B+. The recovery rating on these notes remains unchanged at 5.

The outlook is negative.

"The rating action is based on our expectation that the deterioration in credit protection measures in 2009 is likely to be worse than previously anticipated," S&P analyst Mark Salierno said in a statement.

For the fiscal year ended Dec. 27, total debt-to-EBITDA ratio grew to just above 6x, compared with leverage of about 3x at the end of fiscal 2007.

"We believe that extremely weak global macroeconomic conditions and the protracted slowdown in consumer and corporate spending will continue to pressure operating performance within the company's key business segments, placing further pressure on the company's earnings and cash flow," Salierno added.

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