Moody's: ServiceMaster outlook negative

Moody's Investors Service said it changed the outlook for ServiceMaster Co. to negative from stable and affirmed its ratings, including its corporate family and probability-of-default ratings at B2; $2.6 billion senior secured term loan B due 2014, $500 million senior secured revolving credit facility due 2013 and $150 million senior secured synthetic letter-of-credit facility due 2014 at B1 (LGD3); $1.15 billion 10¾%/11½% senior toggle notes due 2015 at B3 (LGD5, 73%); $79 million senior unsecured notes due 2018, $195 million senior unsecured notes due 2027 and $83 million senior unsecured notes due 2038 at Caa1 (LGD6, 95%); and the speculative-grade liquidity rating at SGL-2.

The loss-given-default rate for the credit facilities was adjusted to 33% from 34%.

The agency said the negative outlook considers the potential for the weakening economy in the United States to depress demand for the company's consumer service offerings during 2009, particularly in the more discretionary lawn care and home warranty business lines.

The B2 corporate family rating is also constrained by financial strength metrics that are weak for the rating category, Moody's said.

The ratings are supported by the company's leading market positions and brands in large end-markets, relatively steady customer retention rates during the first nine months of 2008, modest profitability growth since the 2007 leveraged buyout and good liquidity, the agency added.

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