Moody's lowers Duane Reade

Moody's Investors Service said it downgraded Duane Reade's probability of default rating to Caa2 from Caa1and affirmed the Caa1 corporate family rating.

In addition, Moody's said it lowered the company's senior secured notes rating to Caa1 (LGD 3, 34%) from B3 (LGD 3, 37%).

The outlook is stable.

According to the agency, the downgrade of the probability of default rating reflects the company's persistently weak operating performance, high leverage, and weak interest coverage which creates what Moody's believes to be an unsustainable capital structure over the medium term.

The company's Caa1 corporate family rating reflects the company's geographic concentration in and disproportionate exposure to economic conditions in the intensely competitive New York metro market, along with persistently weak credit metrics such as high leverage and low fixed-charge coverage, the agency noted.

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