Moody's downgrades Sears

Moody's Investors Service said it lowered Sears Holdings Corp.'s corporate family rating to Ba3 from Ba2, along with its probability of default rating to Ba3 from Ba2 and senior secured rating to Ba2 (LGD 3, 39%) from Ba1 (LGD 3, 39%).

Also downgraded was Sears, Roebuck and Co.'s issuer rating to Ba3 from Ba2, Sears Roebuck Acceptance Corp.'s senior unsecured rating to B1 (LGD 5, 76%) from Ba3 (LGD 5, 76%) and Sears DC Corp.'s senior unsecured medium-term notes to provisional B2 (LGD 6, 97%) from provisional B1 (LGD 6, 97%).

The agency also said it affirmed Sears Holdings' speculative-grade liquidity rating at SGL-2 and Sears Roebuck Acceptance's commercial paper at not-prime.

The outlook is negative.

The actions conclude a review for possible downgrade that began in May.

The downgrades reflect the continued negative trends in revenues and operating margins of Sears Holdings and its weakened business and market position, the agency said.

The company has seen persistent declines in consolidated revenues over the past few years, Moody's said, along with pressure on operating margins as the result of erosion in market share.

Credit metrics have weakened and are expected to remain weak for an extended period, the agency added.

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