Times Staff and Wire Reports

Kmart Bond Rating Lowered: Moody's Investors Service downgraded Kmart's bond from Baa-2 to Baa-3, its lowest investment grade. Ratings under Baa-3 are below investment grade and are considered speculative. Moody's said it lowered the rating because lackluster retail sales nationwide are hindering Kmart's recovery efforts. The downgrade was made one day after Kmart reached agreements with bondholders that eliminate covenants that would have forced the company to immediately pay $548 million if its bonds are downgraded to below investment grade. The bond agreement is designed to give Kmart more time to revive its struggling operations. Wall Street responded favorably to the bond agreement; Kmart stock rose $1.625 to close at $7.625 on the New York Stock Exchange.

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