Moody's may cut ACCO

Moody's Investors Service said it put ACCO Brands Corp.'s Ba3 corporate family and probability of default ratings, in addition to its Ba1 senior secured and B2 senior subordinated ratings, under review for possible downgrade and lowered the speculative-grade liquidity rating to SGL-3 from SGL-2 given concerns regarding operating performance as well as the increasing challenge to maintain flexibility under its financial covenants over the next 12 months as the economy remains weak and the metrics tighten.

Other aspects of the company's liquidity are expected to remain good including free cash flow and availability under its revolver, the agency said, noting that its review for possible downgrade will focus on the company's performance in the fourth quarter 2008, the likelihood of the company to be able to continue to reduce debt during 2009 and meet its financial covenants given step downs.

Moody's added that it expects that the company's ability to improve operating performance will remain very difficult in the current economic environment, particularly for the office products space in the United States, ACCO's largest market. Increasing softness is likely to emerge in Canada and Western Europe.

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