Paramount's Melrose on shaky ground

October 29, 2008 Paramount's so-called Melrose I financing, whose senior debt component was led by Merrill Lynch, has been socked with a big rating downgrade by Moody's Investor Service. The downgrade -- in which Moody's chopped its rating on Melrose I from an investment grade "Baa2" to the speculative "B3" rating, or six ratings grades -- has largely gone unnoticed for the past week. The downgrade could trigger higher interest payments to lenders and will surely lower the value of debtholders' bonds.

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