Moody's downgrades Sotheby's

Moody's Investors Service said it downgraded Sotheby's corporate family rating to Ba3 from Ba2 and senior unsecured notes to B1 (LGD 5, 74%) from Ba3 (LGD 5, 82%).

The outlook is stable.

Moody's said the downgrade reflects its expectations that the current cyclical downturn in the auction market will likely last longer and be deeper than expectations.

The Ba3 corporate family rating balances the expectation that Sotheby's will have good liquidity with the expectation that it will maintain weak credit metrics for a prolonged period given the magnitude of the economic downturn and its negative impact on the cyclical art auction market, according to the agency.

The rating is supported by Sotheby's strong qualitative factors, which include a long corporate history, strong brand name and acknowledged expertise in a highly specialized industry that has high barriers to entry and is dominated by two players, Moody's added.

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