Moody's may drop Walgreen

Moody's Investors Service said it placed Walgreen Co.'s long term issuer rating of Aa3 on review for possible downgrade.

The company's Prime-1 commercial paper rating was affirmed, the agency said.

In the credit opinion dated Oct. 19, 2007, Moody's said it cited that Walgreens would need to improve its RCF to net debt metric to above 22% by August 2008.

For the lagging 12 month period ended May 31, Walgreens RCF to net debt was 19.4%, the agency said, adding that the review for possible downgrade is prompted by Moody's concern that Walgreen's will likely not be able to improve this metric to the level considered appropriate for the Aa3 rating, particularly as the company faces a period of slowing comparable store sales growth, possible modest margin pressures and unfavorable domestic economic conditions.

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