Moody’s downgrades Rayonier to Baa3

Moody's Investors Service said it downgraded Rayonier Inc.'s senior unsecured rating to Baa3 from Baa2.

The outlook is stable.

The action concludes a review for downgrade that was initiated on May 2 following the company's announcement to increase the average age of its timberlands in the Pacific Northwest in a transaction that increased 2016 March LTM pro-forma adjusted leverage to about 5.2 times from 4.5 times.

"The downgrade reflects the company's high leverage following the Pacific Northwest transaction," Moody's senior vice president Ed Sustar said in a news release.

"We expect that after capital expenditure and dividends, the company will generate breakeven free cash flow over the next 12-24 months, limiting the company's ability to reduce debt."

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