Moody’s lowers Resolute to stable view

Moody’s Investors Service said it changed Resolute Forest Products Inc.’s outlook to stable from positive.

Moody’s also said it affirmed Resolute’s Ba3 corporate family rating, Ba3-PD probability of default rating and Ba3 (LGD 4) senior unsecured notes rating.

The SGL-1 speculative-grade liquidity rating is unchanged.

The outlook change reflects an expectation that Resolute’s adjusted debt leverage will remain elevated over the next 12 to 18 months as global newsprint demand remains weak and the U.S. housing recovery remains sluggish, Moody’s said.

Weak demand and pricing for newsprint and lumber, coupled with Resolute’s significant underfunded pension plan, have elevated the company’s leverage to nearly 6x, the agency said.

The ratings consider the company’s leading market position, product diversity, strong liquidity and favorable cost position for most of the products that it manufactures, Moody’s said.

The ratings are tempered by the company’s high adjusted leverage given the company’s significant unfunded pension liabilities and the secular decline of newsprint and specialty papers, the agency said.

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