Moody's cuts Worthington notes

Moody's Investors Service said it downgraded Worthington Industries, Inc.’s senior unsecured note rating to Ba1 from Baa2 and assigned a Ba1 corporate family rating, a Ba1-PD probability of default rating and an SGL-1 speculative grade liquidity rating.

Concurrently, Moody's changed the outlook to stable. These actions end the review for downgrade started on July 26.

"The downgrade of Worthington's rating reflects the credit impact from the separation of Worthington Steel which will result in reduced scale, weaker end market and customer diversity, a loss of the natural hedge against rising steel prices, an increased reliance on joint venture earnings and cash flows and higher acquisition risks considering the company's inconsistent track record and its smaller scale post separation," said Michael Corelli, a Moody’s senior vice president, in a press release.

The separation is expected to happen as soon as December. Worthington Steel usually accounts for about 65% - 70% of revenues and 35% - 40% of the company's consolidated EBITDA.

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