Moody's downgrades OfficeMax

Moody's Investors Service said it downgraded the corporate family and probability-of-default ratings of Office Max, Inc. to B1 from Ba2 and senior unsecured notes and debentures to B2 (LGD5, 70%) from Ba3 (LGD4, 69%), and affirmed the SGL-2 speculative grade liquidity rating.

The outlook is negative. The action concludes the review for downgrade that began on Dec. 24.

The downgrade reflects the negative impact on credit metrics resulting from weak second-half performance for 2008, as well as expectation that prospects for improvement for 2009 are slim, according to the agency.

"The macroeconomy continues to pressure OfficeMax's operating performance, with the result being a significant deterioration in key credit metrics," Moody's senior analyst Charlie O'Shea said in a statement.

The B1 rating considers the company's weak credit metrics, with potential for further deterioration, the agency said.

The rating also focuses on Office Max's competitive position, which is solid despite its No. 3 position in the segment, Moody's said.

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