Moody's cuts Washington Prime

Moody's Investors Service said it downgraded the ratings of Washington Prime Group, LP, including its corporate family rating to Ca from Caa3 and its senior unsecured rating to C from Caa3. Washington Prime Group is the main operating subsidiary of Washington Prime Group Inc. The speculative grade liquidity rating remains unchanged at SGL-4.

“The ratings downgrade reflects WPG's modification of its credit facility agreement, which includes an immediate waiver of certain financial covenants (and less restrictive thresholds thereafter) in exchange for temporary partial collateral with release beginning in 3Q21 subject to certain conditions. Accordingly, WPG's unencumbered NOI will decline by approximately 50% to about 26-27% (from 54%) of total NOI (as of 1Q20), reducing its financial flexibility and coverage of its unsecured debt,” Moody’s said in a press release.

The downgrade also reflects WPG's considerable cash flow declines as the coronavirus is hurting its retail tenants' ability to pay rents, the agency said.

The outlook remains negative.

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