Moody's cuts Abitibi ratings

Moody's Investors Service said it downgraded the senior unsecured debt ratings of Abitibi-Consolidated Inc. to Ba2 from Ba1.

The outlook is negative.

Moody's said the ratings downgrade is based on the company's continued high financial leverage and weak financial performance as it copes with low prices for newsprint, the adverse impact of the strong Canadian dollar on the company's financial performance (although the translation of its U.S. dollar debt balance offsets some of the effect), reduced revenues resulting from the U.S./Canada softwood lumber dispute, and higher pension funding requirements.

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