Moody's cuts Reader's Digest

Moody's Investors Service said it downgraded Reader's Digest Association Inc. corporate family and probability-of-default ratings to B3 from B1 and downgraded the senior secured note to B3 (LGD4, 57%) from B1.

The outlook was changed to negative from stable.

The downgrade reflects weaker than expected results, a weakened liquidity position and the issuance of additional debt that matures in 2013 and 2014, according to the agency.

The B3 rating reflects the weak revenue and earnings performance for the first half, the corresponding increase in leverage, the decline in cash balance, the drawdown of the remaining revolver facility post quarter-end, and the issuance of new debt that matures in 2013 and 2014, Moody's said.

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