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Moody's raises outlook on Office depot ratings

NEW YORK (AP) -- Moody's Investors Service on Tuesday raised its outlook for two of Office Depot Inc.'s key credit ratings to "stable" from "negative," citing the office supplier's recent cost-cutting efforts.

The ratings firm said Office Depot's recent cost cuts have boosted key credit metrics and made its debt less risky. Moody's also said that, although the company's credit metrics remain weak, its position as the No. 2 office supply retailer is solid.

Moody's outlook covers Office Depot's "B2" speculative grade corporate family and probability of default ratings, but the firm didn't change the ratings themselves.

Moody's also assigned a "B2" rating to Office Depot's proposed $250 million in senior secured notes and affirmed its "SGL-1" speculative grade liquidity rating for the retailer.

The "B2" ratings also take into account the effects of continued tough economic conditions in the United States and Europe, Moody's said.

Moody's said it could consider raising Office Depot's ratings if the profitability of its North American and International businesses improves.

By midday, Office Depot shares were down 7 cents, or 2.2 percent, trading at $3.11.