Moody’s lowers Quad/Graphics, notes

Moody's Investors Service said it downgraded Quad/Graphics, Inc.'s corporate family rating to Ba3 from Ba2, probability of default rating to Ba3-PD from Ba2-PD and senior unsecured notes to B2 from B1.

The senior secured credit facility was affirmed at Ba2, the speculative grade liquidity rating was downgraded to SGL-3 (adequate) from SGL-1 (very good) and the outlook was changed to negative from stable.

"The action was prompted by Moody's assessment that Quad's de-levering capacity has been permanently impaired, and that Moody's adjusted leverage of Debt-to-EBITDA would remain elevated at about 4x over the next year or so," Moody’s senior vice president Bill Wolfe said in a news release.

In turn, the agency’s reassessment was prompted by Quad's third quarter earnings-related disclosure that business fundamentals had unexpectedly and materially deteriorated, causing, among other things, a sizeable, 14%, downwards revision in 2015 EBITDA as well as a $775 million Goodwill impairment.

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