Moody's cuts Office Depot

Moody's Investors Service said it downgraded Office Depot, Inc.'s corporate family and probability-of-default ratings to B1, and senior unsecured note rating to B3, and left the ratings on review for further downgrade. Office Depot's SGL-3 speculative grade liquidity rating was affirmed.

The downgrade results from Office Depot's continuing difficulty in navigating the weak operating environment, culminating in fiscal year-end 2008 performance that resulted in a debt-to-EBITDA ratio of 6.3 times, according to the agency.

"Office Depot's operating performance is continuing to suffer as a result of the severe downturn in the economy, as well as its geographic concentration in the particularly hard-hit California and Florida markets," Moody's analyst Charlie O'Shea said in a statement.

The review reflects the lack of earnings visibility with respect to 2009 performance and uncertainty as to whether Office Depot will be able to stabilize its performance, the agency said.

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