Moody's cuts R.R. Donnelley

Moody's Investors Service said it downgraded R.R. Donnelley & Sons Co.'s issuer rating and senior unsecured debt ratings to Baa3 from Baa2 and its commercial paper rating to Prime-3 from Prime-2.

This concludes a review for possible downgrade begun on Jan. 14, and the outlook is stable.

The agency said its decision to downgrade the ratings was influenced by poor industry fundamentals characterized by secular and cyclical declines that significantly suppress every participant's profit margins and organic growth prospects.

Moody's said this primary influence is partially offset by R.R. Donnelley's industry-leading capabilities and profit margins and the company's strong liquidity position, but the company's focus on incremental, non-organic, debt-financed growth, while also providing equity investors with cash returns, exacerbates the negative impact of poor industry fundamentals.

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