Moody's cuts Reader's Digest

Moody's Investors Service said it downgraded Reader's Digest Association Inc.'s corporate family and probability of default ratings to Caa1 from B3 and downgraded the senior secured notes to Caa1 from B3.

The outlook remains negative.

Moody's said the downgrade reflects weaker than expected results in the first and second quarters of 2012 against weak comparable prior year earnings, the resulting increase in leverage and a weak liquidity position exacerbated by a potential covenant violation of its new term loan facility.

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