Moody's lifts American Greetings view to stable

Moody's Investors Service said it changed American Greetings Corp.'s outlook to stable from negative and affirmed the corporate family and probability-of-default ratings at Ba1 and the company's $200 million senior unsecured notes due 2016 and $22.7 million senior unsecured notes due 2028 at Ba2 (LGD5). The loss-given-default rate assigned to the notes was revised to 75% from 81%.

The agency said the outlook revision reflects the company's stronger-than-expected cash flows, despite significant investments to support its strategic card initiative and additional scan-based trading rollouts. As a result, the company's credit metrics exceeded the amounts Moody's had stipulated in May 2006 as conditions for revising the outlook to stable, including a debt-to-EBITDA ratio below 3x and free cash flow to debt above 10%.

The outlook revision also reflects the recent reduction in the delayed-draw term loan commitment to $100 million from $300 million, which Moody's views as more conservative financial policy given the facility was put in place, in part, to support share repurchases.

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