Moody's Downgrades Sears' Speculative Grade Liquidity Rating

(RTTNews) - Shares of Sears Holding Corp. were on the decline subsequent to a downgrade of Speculative Grade Liquidity rating to SGL-3 from SGL-2 by Moody's Investors Services.

The rating agency noted that the ratings reflected its view on the uncertainty of the viability of the Kmart franchise, particularly on its market share erosion. The company needs to meaningfully reduce operating losses and maintain a good liquidity profile for an upgrade in future.

Moody's Vice President, Christina Boni said, "The SGL-3 rating reflects our view that Sears will continue to rely on external financing and the monetization of its alternative assets to fund its operating losses. We recognize the risks associated with relying on these sources and continued shareholder support to finance its negative operating cash flow which is estimated by Moody's to be approximately $1.5 billion this year."

Sears that operates 1,592 stores in the US, including Roebuck and Co. Kmart Corp, along with its online stores has recorded operating loss or domestic adjusted EBITDA loss of $836 million in for fiscal 2015.

According to Moody's, ratings could be downgraded if Sears' liquidity were to weaken, or if probability of default were to otherwise increase.

In the pre-market session, SHLD was down 1.41 percent to $11.89.