Moody's cuts some RadioShack notes

Moody's Investors Service said it downgraded RadioShack Corp.'s senior convertible note rating to Ba2 (LGD4, 68%) from Ba1 (LGD4, 55%) and affirmed its Ba1 corporate family and probability-of-default ratings as well as the Ba1 rating (LGD4, 63%) on RadioShack's 7 3/8% 2011 senior notes.

The outlook remains stable.

The downgrade of the 2.5% senior convertible notes due 2013 was a result of RadioShack's Jan. 7, 2011 announcement that it had refinanced its $325 million unsecured revolving credit facility (unrated) and replaced it with a new five year $450 million senior secured asset-backed loan revolving credit facility (unrated), according to the agency.

RadioShack's Ba1 corporate family rating reflects its sound credit metrics, healthy cash flow, moderate seasonality and cyclicality, the large number and accessibility of its stores, and its successful product strategy, the agency said.

Ratings are constrained by product volatility and business risk inherent in consumer technology, the agency noted.

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