Moody’s lowers Macy's to junk

New York City Moody's Investors Services downgraded Macy's debt on Wednesday into junk territory, saying the department store chain's credit metrics have deteriorated along with its operating performance.

Senior credit officer Maggie Taylor lowered her rating on the company's senior unsecured notes to Ba2, from Baa3.

The new rating is two notches below junk status.

"The downgrade also reflects Moody's expectation that Macy's operating performance will continue to be pressured given the current challenging consumer-spending environment," Taylor said in a statement, adding she expects the company's credit metrics to deteriorate further over the next year.

The retailer has been particularly hurt by the recession, which has kept shoppers from spending money.

Moody's acknowledged Macy's problems relate to the nation's economy instead of the company's corporate structure, adding that it had good liquidity and had implemented efforts to preserve cash by reducing a dividend and capital expenditures, along with inventory and other expenses.

Meanwhile, Moody's assigned a Corporate Family Rating of Ba2, a Probability of Default Rating of Ba2, and a Speculative Grade Liquidity Rating of SGL-2. The rating outlook is stable.