Moody's cuts Quebecor World

Moody's Investors Service said it downgraded Quebecor World Inc.'s corporate family and probability-of-default ratings by two notches to Caa2 and senior unsecured regular bond/debenture to Caa3 (LGD4, 67%) from Caa1 (LGD4, 66%). The issuer's speculative grade liquidity rating remains at SGL-4, indicating poor liquidity.

Quebecor World Capital Corp.'s unsecured regular bond was downgraded to Caa3 (LGD4, 67%) from Caa1 (LGD4, 66%) and Quebecor World Capital ULC's unsecured regular bond was downgraded to Caa3 (LGD4, 67%) from Caa1 (LGD4, 66%).

The outlook was changed to negative.

Moody's said the rating action concludes a review initiated on Nov. 23 and reflects increased default risk as the company looks to renegotiate bank credit facility arrangements in advance of potential financial covenant defaults that could occur when year-end compliance is tested.

The company's ability to manage the situation has been hurt by the cancellation of a previously announced sale of its European operations, the agency said.

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