Moody's lowers Bowater ratings

Moody's Investors Service said it downgraded the ratings of Bowater Inc. to Ba2 (senior implied). The outlook is negative.

Ratings lowered include Bowater Inc.'s senior unsecured notes, debentures, and revolving credit facility to Ba2 from Ba1, industrial and pollution control revenue bonds to Ba2 from Ba1, senior implied rating to Ba2 from Ba1, issuer rating to Ba2 from Ba1. Also lowered were Bowater Canada Finance Corp.'s senior unsecured guaranteed notes to Ba2 from Ba1.

Moody's confirmed the speculative grade liquidity rating of SGL-3.

Moody's said the ratings downgrade is based on Bowater's continued high financial leverage and weakened financial metrics, the prolonged downturn for most of Bowater's products (particularly newsprint), and Moody's concern that debt protection measurements will remain weak over the medium, although steady improvements in 2004 and 2005 are likely if recent and expected newsprint price increases are realized.

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