Moody’s drops 99 Cents Only, loans, notes

Moody's Investors Service said it downgraded the corporate family and probability of default ratings of 99 Cents Only Stores LLC to B3 and B3-PD from B2 and B2-PD, respectively.

The agency also downgraded the ratings of the $599 million senior secured term loan to B3 from B2 and $250 million senior unsecured notes to Caa2 from Caa1.

The outlook was revised to negative from stable and the speculative grade liquidity rating was lowered to SGL-3 from SGL-2.

"The company's operating performance continues to be weak in large part due to poor execution by management resulting declining same store sales, margins and earnings," Moody's senior analyst Mickey Chadha said in a news release.

"The underperformance has resulted in the weakening of credit metrics to levels that are not consistent with current ratings and we do not expect much improvement in the next 12 months."

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