Moody's drops Boston Scientific to junk

Moody's Investors Service said it downgraded the credit ratings of Boston Scientific Corp., adding that the company's senior unsecured debt rating was downgraded to Ba2 from Baa3 and its short term debt rating was downgraded to Not Prime from Prime-3.

At the same time, Moody's said it assigned a Ba1 corporate family rating to the company.

The outlook is negative.

The agency said that this rating action primarily reflects the following concerns: (1) second quarter results continue to show lower than expected cash flows, (2) the lack of definitive action related to material asset sales, which could provide financial flexibility, (3) the potential for regulatory and litigation matters to further impinge on liquidity and (4) the potential for covenant violations under its bank agreement over the next twelve months.

The negative outlook reflects concerns that uncertain sales recovery in key product lines and heightened competition in 2008 could contribute to even lower operating cash flows, Moody's said.

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