Moody's lowers Rouse, affirms General Growth

Moody's Investors Service said it affirmed the Ba2 senior secured bank debt ratings of General Growth Properties, Inc. and some of its subsidiaries and concurrently downgraded the senior unsecured debt ratings of Rouse Co. LP to Ba2 from Ba1.

The outlook is stable.

The affirmation of General Growth's senior secured bank debt reflects Moody's expectation that General Growth will manage through its significant refinancing and development funding needs over the next two years. The agency said it also expects no major retailer bankruptcies, with General Growth maintaining solid operating performance at its retail centers through what could be a protracted economic downturn.

The downgrade of Rouse's bonds reflects an increased likelihood that the unencumbered portfolio and unencumbered net operating income of Rouse will be negatively affected due to General Growth's strained financial flexibility in a capital-constrained environment, Moody's said. The REIT has significant refinancing and development funding needs over the next two years that are coupled with a substantial weakening in the master-planned communities business and expected earnings pressure due to a potentially protracted downturn in the economy that could pressure the cushion at both the secured debt and interest coverage covenants for the Rouse bonds.

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