Moody's cuts Clorox to Baa1

Moody's Investors Service said it downgraded the senior unsecured debt rating of the Clorox Co. to Baa1 from A3 and affirmed its short-term debt rating at Prime-2.

This completes the review for possible downgrade, and the outlook is stable.

The agency said the downgrade reflects the recent deterioration in Clorox's credit metrics resulting from debt incurred to repurchase $750 million of its equity under an accelerated share repurchase program. Pro forma for the share repurchase, retained cash flow to net debt would be about 18%.

Clorox's Baa1 senior unsecured rating reflects the company's leading market positions in most of its midsized product categories, strong brand name recognition, product innovation and steady revenue growth, Moody's said.

These factors are tempered by the proliferation of new products with their inherent marketing expenditure requirements, the ongoing intense competition for global market share growth, somewhat limited diversity of sales in terms of geography and retail customer, volatility in the company's Latin American segment and exposure to volatile raw material and energy prices, Moody's said.

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