Moody's Downgrades Kmart Ratings: Kmart Corp.'s long-term debt and preferred stock ratings were lowered by Moody's Investors Service, so it will be more expensive for the nation's second-largest retailer to borrow money. Moody's cited concern about competition from other discount chains and specialty stores. It lowered Kmart's senior debt to A2 from A1 and its preferred stock to A3 from A2. It also cut the rating on Kmart's Pace Membership Warehouse Inc. subsidiary to A3 from A2. About $2.8 billion of long-term debt and $23 million of preferred equity redemption cumulative stock were downgraded.