NEW YORK, April 1 (Reuters) - Moody’s Investors Service on Wednesday cut Macy’s Inc’s (M.N) credit rating to junk status, saying the department store chain’s performance will likely remain under pressure amid weak consumer spending.
Macy’s credit quality is expected to worsen over the next 12 months to a level that will be weak even for the new junk rating, Moody’s said in a statement.
Moody’s cut Macy’s senior unsecured rating by two notches to Ba2, the second highest junk rating, from Baa3. The outlook is stable, meaning another rating change is not expected over the next 12 to 18 months.
“Macy’s performance decline is largely correlated to the current weak consumer spending environment and is not a result of any fundamental issue with its franchise or execution ability,” Moody’s said.
“The rating is supported by Macy’s good liquidity and its ability to pay off its near-dated maturities with cash,” the agency said.
Macy’s has also taken several steps to preserve cash, including cutting its dividend, capital expenditures, inventory, and expenses, Moody’s said.
Macy’s 6.65 percent notes due in 2024 were little changed early on Wednesday at 53.5 cents on the dollar, according to MarketAxess. (Reporting by Dena Aubin; Editing by Theodore d’Afflisio) (firstname.lastname@example.org; +1-646-223-6325; Reuters Messaging: email@example.com))