Moody's Downgrades Home Depot Ratings

New York, NY, July 27, 2007-- Moody's Investors Service downgraded all ratings on Home Depot and left all ratings on review for further possible downgrade.

The senior unsecured rating was downgraded to Baa1 from Aa3, and the short-term rating was downgraded to Prime-2 from Prime-1, the agency said.

The downgrades were due to the significant increase in leverage that will occur following completion of Home Depot's $22.5 billion share buyback, the loss of about $1 billion in earnings before interest, taxes, depreciation and amortization following the sale of Home Depot Supply without any corresponding debt repayment, and the company's stated intention to manage to a 2.5 times debt/EBITDA ratio, Moody's said.

The continuing review action reflects concerns about the funding of the initial phase of the share buyback, a tender offer that will require about $11 billion to settle on August 23, and the potential loss of  liquidity of some of the possible payment scenarios, the agency said.