Moody's Cuts Sears' Credit Ratings Further Into Junk Territory On Weak Sales

Moody's Investors Service on Friday downgraded ratings on Sears Holdings to Caa2 from Caa1, sending the credit further into speculative, or "junk" territory. The action reflects the retailer's steadily deteriorating performance after it said holiday same-store sales fell 12% to 13% from the year-earlier period. "Although Sears has been able to fund its continued cash shortfalls through planned asset monetization, and additional financings, a meaningful business turnaround in fiscal 2017 is critical given the continued reduction of its asset base", Moody's Vice President, Christina Boni said in a statement. "We expect operating cash flow to approach a disappointing loss of $1.5 billion for fiscal 2016." Sear's most active bonds, the 6.625% notes due October 2018 were trading at 93 cents on the dollar, according to MarketAxess.