Moody’s downgraded the ratings for the notes from Baa3 to Ba1, and also downgraded Avon Capital Corporations commercial paper rating to Not Prime, from Prime-3, reflecting the fact that its financial performance has continued to weaken in recent quarters.
“The downgrade reflects Moody's concern that competitive and structural challenges associated with Avon's direct selling model are creating pressure on representative levels, revenue and cash flow. The rating outlook is stable,” Moody's stated.
The fact that the outlook is stable might hint at a strengthened future, thanks to the longer-term effects of the restructuring program, together with the fact that it has just settled a long-standing lawsuit over corruption charges in China.