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Investors continue to downgrade Blockbuster.

Moody’s Investors Service has lowered shares of Blockbuster two notches closer to default, worrying that the company’s weak bottom line and heavy debt repayment schedule — to lower some $1 billion in debt — increases the likelihood of a distressed exchange.

The Dallas-based company has been closing stores as more consumers switch to online rental services and kiosks. Blockbuster lost $435 million in the fourth quarter.

As a result, Moodys lowered Blockbuster from “Caa1” to “Caa3,” two notches into junk status.

Move comes as Blockbuster is bringing back late fees. It will charge $1 for up to 10 days for late returns, capping the fees at $10 on $4.99 new releases. It is also limiting the time for those rentals to five days from the previous seven-day range. Nearly 80% of Blockbuster’s rentals are new releases, the company said.

Shares of Blockbuster are down two-thirds over last year, with the stock trading at 31 cents.