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Moody's cuts Asbury Automotive
Moody's Investors Service said it downgraded Asbury Automotive Group, Inc.'s corporate family and probability-of-default ratings to B2 from B1, and senior subordinated notes to Caa1 (LGD5, 87%) from B3 (LGD5, 85%).
The outlook is negative. The actions conclude the review for downgrade that began on Dec. 22.
The downgrade considers the weakened credit metrics that have resulted from Asbury's soft 2008 operating performance, with a debt-to-EBITDA ratio rising to 6.9 times at fiscal year-end 2008, which represents an increase of more than two turns from fiscal 2007, according to the agency.
"Moody's concern is that the tough macroeconomic environment for the auto dealers will continue well into 2009, and it may be difficult for Asbury to staunch the downward momentum it is presently feeling," Moody's senior analyst Charlie O'Shea said in a statement.
The B2 rating considers Asbury's weak credit metrics, as well as its strong market position in the still very fragmented auto retailing segment, the agency said.
The rating also considers Asbury's historically-favorable brand mix and its operating profit trend away from new vehicle sales, Moody's said.
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