Moody's: Domtar to positive

Moody's Investors Service said it affirmed Domtar Corp.'s Ba1 corporate family rating while revising the outlook to positive from stable.

The company has a speculative-grade liquidity rating of SGL-1.

The improvement of Domtar's outlook primarily recognizes the company's significant de-leveraging through absolute debt reduction and reflects expectations of continuing strong financial performance resulting in credit protection measures that are very strong for its rating category, Moody's said.

During fiscal 2010, Domtar repaid about $1 billion, or roughly 45%, of its adjusted debt, the agency said.

Credit challenges also include the company's lack of diversification and the inherent volatility of the company's market pulp business, Moody's added.

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