Moody's may lower Starwood senior unsecured

Moody's Investors Service said it placed Starwood Hotels & Resorts Worldwide, Inc.'s senior unsecured ratings on review for possible downgrade in response to the company's reduced earnings guidance for 2009.

Although Starwood has taken action to reduce costs and curtail capital spending in an effort to generate cash to reduce debt, industry fundamentals continue to weaken, the agency said, adding that this can be evidenced by declining RevPAR (revenue per available room) trends as leisure and business travelers continue to curtail travel.

Additionally, the lower earnings outlook coupled with limited visibility regarding future trends increases the probability that Starwood will need to amend its debt/EBITDA covenant, Moody's said.

The review for possible downgrade will focus on Starwood's RevPAR trends and their likely impact on earnings and cash flow, the company's ability to reduce debt through other means, as well as the need to address potential covenant tightness, the agency noted.

Affected ratings include the company's senior unsecured bonds and debentures at Baa3, senior unsecured shelf at provisional Baa3, senior subordinated shelf at provisional Ba1 and preferred debt shelf at provisional Ba2.

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