Moody's downgrades Behr

Moody's Investors Service said it downgraded to Ba2 from Baa3 the senior unsecured rating of Behr GmbH & Co KG and assigned a Ba2 corporate family rating.

The agency also downgraded the subordinated rating for Behr's perpetual subordinated bond to B1 from Ba2 reflecting a loss given default assessment of 6 given the deeply subordinated status of this instrument.

The outlook remains negative.

"The downgrade was triggered by the company's announcement of a significant burden on profits expected for the current year resulting from the intensified market weakening in U.S. and Europe as well as rising material costs in the second half of the year," Falk Frey, a senior vice president at Moody's, said in a written statement.

The Ba2 rating reflects risks related to the limited absolute scale of Behr's operations, its focus on the European market, customer concentration, ability to offset recent raw material price increases and efficiency improvement activities, the agency said.

The Ba2 rating also reflects Behr's solid and sustained position in the market, stable customer relations, strong technological position and joint venture strategy to penetrate Asian markets and to expand business activities, the agency noted.

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