Moody's lowers Catalyst

Moody's Investors Service said it lowered the corporate family rating of Catalyst Paper Corp. to B3 from B1 and its senior unsecured debt ratings to Caa1 from B2. Catalyst's SGL-3 speculative grade liquidity rating was affirmed.

The outlook is negative.

The action reflects expectation that the rapid deterioration in industry conditions will cause Catalyst's financial performance to weaken materially over the next 12 to 18 months, according to the agency.

The B3 corporate family rating reflects the company's limited financial flexibility due to its significant debt load, its exposure to newsprint and coated paper, lack of diversification and exposure to volatile foreign-exchange movements and input costs, Moody's said.

Catalyst's rating is supported by the company's position as one of the leading producers of telephone directory paper in the world and specialty papers and newsprint in Western North America, and its ownership of Western Canada's largest recycling facility, the agency said.

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