Moody’s drops Avon, debt

Moody's Investors Service said it downgraded Avon Products, Inc.'s corporate family rating to B1 from Ba3, probability of default rating to B1-PD from Ba3-PD and senior unsecured instrument rating to B3 from B1.

At the same time, the agency affirmed the Ba1 rating on Avon International Operations, Inc.'s $500 million senior secured notes. Avon International is a wholly owned domestic subsidiary of Avon Products

Moody's also withdrew Avon's speculative grade liquidity rating at SGL-2.

The outlook is stable.

Moody’s said the downgrade reflects its uncertainty regarding Avon's success in executing its new transformation plan and concerns that challenging economic conditions in several of the company's key regions will temper its ability to stabilize or grow revenues and earnings over the next 12 to 18 months.

The downgrade also reflects the company's high exposure to potentially volatile emerging markets.

In addition, the agency said it believes that financial leverage will remain relatively high until Avon can execute its transformation plan and reinvigorate growth.

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