Moody's rates Starwood note Ba1

Moody's Investors Service said it assigned a Ba1 rating (LGD4, 55%) to Starwood Hotels & Resorts Worldwide, Inc.'s proposed $250 million senior unsecured notes.

The agency affirmed Starwood's Ba1 corporate family and probability-of-default ratings.

Proceeds will be used to tender for up to $200 million of the company's 7 7/8% senior notes due 2012 and up to $100 million of its 6¼% senior notes due 2013. If the cash tender offers are not completed, any remaining proceeds will be used for general corporate purposes.

Moody's also downgraded Starwood's speculative grade liquidity rating to SGL-3 from SGL-2. Starwood's liquidity profile is adequate. The downgrade of the company's SGL rating reflects the February 2011 maturity of its $1.875 million revolving credit facility and $300 million term loan.

Starwood's Ba1 corporate family rating reflects its average scale in terms of system-wide rooms, launch of higher margin franchise brands and a solid hotel development pipeline, the agency said.

Ratings also consider Starwood's moderately high leverage and weak interest coverage, sensitivity to economic cycles and poor demand outlook that will pressure earnings through 2010, the agency said.

Starwood's debt-to-EBITDA ratio is expected to rise moderately above 4.5 times in 2009.

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