Moody’s cuts REEF Global

Moody's Investors Service said it downgraded and placed under review for further downgrade REEF Global Midco LLC's corporate family rating and backed senior secured first-lien bank credit facility ratings to B3 from B1, and its probability of default rating to B3-PD from B1-PD. Previously, the outlook was stable.

“The downgrade of REEF's ratings reflects deteriorating customer retention in a mature and competitive business, a significant shift in strategy that included the spin-off of a business that the company previously expected to grow rapidly, and the consequent impact of these factors on its financial metrics. At the end of the second quarter of 2023, the company's debt to EBITDA for the last 12 months was high at 7.6x, and EBITA/interest was weak at 0.3x, excluding the one-time restructuring-related adjustments,” Moody’s said in a press release.

The agency said it placed REEF under review for further downgrade because of the elevated risk of a covenant breach, particularly the interest coverage covenant.

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