Moody's may lower Steinway

Moody's Investors Service said it placed the credit ratings of Steinway Musical Instruments on review for possible downgrade following news that it reached an agreement to sell its band division.

The SGL-2 speculative-grade liquidity rating was affirmed, but could change if the proposed transaction is completed.

The ratings on downgrade review include Steinway's corporate family and probability of default ratings of B1 and senior unsecured notes rating of B2 (LGD 5, 75%).

Steinway recently announced that it reached an agreement in principle to sell its band division to an investor group led by two current directors of the company, Moody's said.

The ratings also are constrained by the high degree of volatility in demand of pianos during weak economic times and the lingering uncertainties in the macro economy, the agency said.

The ratings are supported by Steinway's solid credit metrics, strong brand recognition, commitment to high product quality and the recurring revenue of the band instrument segment, Moody's said.

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