Moody's lowers RadioShack

Moody's Investors Service said it downgraded RadioShack Corp.'s corporate family and probability of default ratings to Ba2 from Ba1.

The agency also downgraded its $375 million 2½% senior unsecured convertible notes due 2013 to Ba3 (LGD 4, 64%) from Ba2 (LGD 4, 64%), $325 million senior unsecured notes due 2019 to Ba3 (LGD 4, 64%) from Ba2 (LGD 4, 64%) and its senior unsecured shelf rating to provisional Ba3 from provisional Ba2.

The outlook remains negative.

RadioShack's SGL-1 speculative-grade liquidity rating also was affirmed.

The negative trend in margins and credit metrics for RadioShack is not expected to reverse in the near- to medium-term due to the highly competitive environment in its mobility business, increasing promotional sales and the proliferation of lower margin smart phones, said Mickey Chadha, a Moody's analyst.

Underpinning and providing support to the ratings is the company's very good liquidity, the agency said.

The negative outlook reflects an opinion that the 2012 operating environment will remain challenging and that RadioShack's ongoing lackluster operating performance is resulting in margin erosion, Moody's said.

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