Moody’s drops Insight Global loans to B1

Moody's Investors Service said it affirmed IG Investments Holdings, LLC's (the entity that indirectly owns Insight Global, LLC) B1 corporate family rating and B1-PD probability of default rating.

In the same action, the agency downgraded to B1 from Ba3 the rating on the company's first-lien senior secured credit facilities, consisting of proposed amended and upsized $921 million term loan due 2021 (including $740 million outstanding and $170 million add-on) and a $60 million revolving credit facility expiring 2019.

The outlook is stable.

Insight Global's contemplated transaction includes an amendment and an upsize of its first-lien term loan due 2021, the proceeds of which will be used to retire the company's $170 million second-lien term loan due 2023 (unrated).

Moody’s said the proposed transaction is debt neutral, but is credit positive because of the estimated $8 million of annual interest savings that will modestly improve free cash flow. Insight Global's debt to EBITDA (inclusive of Moody's standard adjustments) stood at roughly 5.6 times at June 30, 2016 and EBITA to interest coverage pro forma for the transaction is estimated at about 2.7 times.

The second-lien term loan was issued in April 2016 to fund a dividend distribution to private equity sponsor Ares Management.

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