Hechinger Co. debt ratings were cut by Moody's Investors Service yesterday, less than a week after Standard & Poor's took similar steps to reflect rising competitive pressures on the home improvement retailer.
Moody's trimmed ratings on Hechinger's senior debt to "Ba3" from "Ba1" and on convertible senior notes to "B2" from "Ba3."
Moody's cited the Landover company's deteriorating financial performance as well as the expectation that competitive pressures and a weak retail market in the core Maryland-Virginia market will continue to hurt earnings.
About $325 million of debt was affected.
Standard & Poor's cut Hechinger's senior debt rating to "B- plus" from "BB-minus" on Feb. 9, citing similar concerns.
Hechinger's debt already was below investment grade, or junk status, before the latest changes.
Lower credit ratings force up the cost of borrowing money on the credit markets, as investors demand higher interest rates to compensate for higher perceived risk.
Hechinger operates home improvement centers under the Hechinger and Home Quarters names.