Moody's lowers Cristal

Moody's Investors Service said it lowered the corporate family rating of Cristal Inorganic Chemicals Ltd. to B3 from B2, its secured first-lien revolver and term loan to B1 (LGD2, 27%) from Ba3 (LGD3, 30%) and its second-lien term loan to Caa1 (LGD4, 68%) from B3 (LGD5, 77%).

The downgrade is in response to the company's weak fourth and first quarter results, combined with the expectation that headroom under its amended financial covenants in the first-lien credit facility will be substantially reduced according to the agency.

Cristal's liquidity is strained and will likely require additional cash infusions from its sponsors to maintain compliance with the financial covenants in its credit facilities over the next year, the agency added.

The outlook is negative.

"To the extent that the company can delay the anticipated decline in selling prices in 2009 or benefit from a faster decline in ore prices, performance could rise above our current expectations and approach prior year levels, excluding extraordinary items," John Rogers, a senior vice president at Moody's, said in a statement.

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