Moody's ups Pep Boys

Moody's Investors Service said it upgraded Pep Boys-Manny, Moe & Jack, Inc.'s corporate family and probability of default ratings to B1 from B2, senior secured term loan to Ba2 (LGD 2, 27%) from Ba3 (LGD 2, 28%) and senior subordinated notes to B3 (LGD 5, 79%) from Caa1 (LGD 5, 80%).

Moody's said it also affirmed the SGL-2 speculative grade liquidity rating.

The outlook is stable.

The upgrade reflects the continuing improvement in operating performance, particularly on the expense side, that has resulted in an enhanced credit profile, Moody's said.

The affirmation reflects Pep Boys' ability to meet most of its operating cash flow requirements from internal sources, with only moderate reliance on its unrated $300 million asset-based revolving credit facility that expires in 2013, the agency said.

The debt-to-EBITDA ratio has reduced to 4.1 times.

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