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ATLANTA Jan 22 Moody's Investors Service downgraded credit ratings on Whirlpool Corp (WHR.N) on Thursday and revised its outlook on the appliance maker to negative, citing the pullback in discretionary consumer spending.
The action follows a move by Standard & Poor's, which cut ratings on Whirlpool to one notch above speculative, or "junk" status, earlier this week and said it expects demand for home appliances to fall this year.
Whirlpool's shares were down 5 percent to $35.62 in afternoon New York Stock Exchange trading.
The lower ratings could make raising funds through the credit markets more expensive.
"We don't have any comment on the actions taken by S&P or Moody's, except to say that given the state of the industry, these changes are not surprising," Whirlpool spokeswoman Jill Saletta said in an email.
Moody's cut its Whirlpool senior unsecured rating to Baa3 from Baa2. The company's commercial paper rating was downgraded to Prime-3 from Prime-2.
The recession and credit crunch are compounding woes of appliance makers, which were already struggling in the wake of the U.S. housing slump.
Whirlpool has posted lower quarterly earnings during 2008, hurt by higher materials costs and falling appliance sales in North America, its biggest market.
"While Moody's expects that Whirlpool's free cash flow will likely improve in 2009 due to working capital benefits, the sustainability of such improvements may come under pressure" if spending continues to slow, the ratings agency said.
On Tuesday, S&P cut Whirlpool's corporate credit rating by one notch to "BBB-minus" and said the outlook was stable. (Reporting by Karen Jacobs; Editing by Phil Berlowitz)