Moody's may cut Sonic Automotive

Moody's Investors Service said it placed the Ba3 corporate family and probability of default ratings of Sonic Automotive, Inc. on review for possible downgrade.

Affected ratings include the company's senior guaranteed subordinated notes at B1 and senior convertible subordinated notes at B2.

The review for downgrade reflects Moody's concerns that Sonic's credit metrics, which have become weak for the Ba3 rating, will likely continue to deteriorate for the balance of 2008 and into 2009.

"EBIT/gross profit could continue to deteriorate over the next six to 12 months, and leverage could spike to close to 7 times," stated Moody's senior analyst Charlie O'Shea.

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