Moody's cuts Sun Products

Moody's Investors Service said it downgraded the corporate family and probability of default ratings of Sun Products Corp. to B2 from B1, reflecting the company's deteriorating credit metrics due to the highly competitive laundry care business and higher input costs.

The stable outlook reflects a view that operating conditions will remain challenging for the company in the near-term.

But profitability and credit metrics should remain within acceptable ranges for a B2 rating, Moody's said.

Sun's credit metrics are likely to deteriorate further in the near-term as still highly aggressive promotional spending by large, deep-pocketed competitors, combined with escalating raw material costs, continue to depress category growth and profitability, the agency said.

The ratings reflects its high leverage, heightened competitive activity from better capitalized operators and significant retailer concentration for its core private label and branded laundry care products, Moody's said.

The ratings benefit from a good liquidity profile, full access to the company's revolving credit facility and no significant near-term debt maturities, Moody's said.

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