Moody's cuts Horizon

Moody's Investors Service said it downgraded its debt ratings of Horizon Lines, Inc., including the corporate family and probability of default, each to B2 from B1, senior secured to Ba2 from Ba1 and senior unsecured to Caa1 from B3.

Moody's said it also changed the outlook to negative from stable.

The downgrades were prompted by 2008 operating results that continue to trail expectations, both from the time of Horizon's August 2007 refinancing and from the company's 2008 quarterly earnings calls, the agency added. As a result, credit metrics have migrated to levels indicative of B2-rated corporate families.

"Moody's also believes that there are few catalysts to spark a positive inflection of demand in 2009, particularly in Horizon's Hawaii and Puerto Rico markets. This could sustain pressure on margins and operating cash flow and slow the pace of the planned de-levering of the capital structure," said Moody's analyst, Jonathan Root.

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