Moody's downgrades Loyalty Ventures

Moody's Investors Service said it downgraded Loyalty Ventures Inc.'s corporate family rating to B2 from B1, probability of default rating to B2-PD from B1-PD, and term loans and revolver to B2 from B1.

Moody's also dropped the speculative grade liquidity rating to SGL-3 from SGL-1 and changed the outlook to negative from stable.

"Today's rating actions reflect our expectation that Loyalty Ventures' operating and financial performance will remain weak over the next 12-24 months as cost inflation and softening in demand will limit EBITDA and cash flow recovery and result in leverage around 7x," stated Aziz Al Sammarai, a Moody's analyst, in a press release.

Uncertain consumer demand, higher prices, uncertainties related to Air Miles reward miles redemption, and limited visibility for the behavior of Air Miles sponsors could further erode liquidity and boost leverage over the next 12-18 months, the agency said.

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