Moody's drops Sesac loans, rates loan B2

Moody's Investors Service said it assigned a B2 rating to Sesac Holdco II LLC's proposed $115 million incremental first-lien term loan.

At the same time, the agency downgraded the ratings on the existing first-lien term loan tranche ($233 million outstanding) and senior secured revolving credit facility to B2 from B1 and probability of default rating to B3-PD from B2-PD.

Sesac's B2 corporate family rating was affirmed.

The outlook is stable.

Net proceeds will be used to retire the entire second-lien credit facility, which currently has $110 million outstanding.

The transaction has no impact on the corporate family rating because the term loan add-on will refinance the second-lien facility, without a material increase in debt.

However, Moody's said, given the elimination of second-lien junior debt from Sesac's capital structure, the first-lien credit facility's rating was downgraded by one notch to B2 to reflect the higher loss absorption this class of debt will now sustain in a distressed scenario under Moody's Loss Given Default Methodology.

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