Moody's assigns Baa2 to Choice Hotels loan

Moody's Investors Service said it assigned a Baa2 rating to Choice Hotels International Inc.'s senior secured $200 million revolving credit facility and $150 million senior secured term loan due July 2016.

In addition, Moody's affirmed the Baa3 rating on the company's $400 million senior unsecured notes and $250 million senior unsecured notes.

The outlook is negative.

Moody's said the Baa3 senior unsecured ratings of Choice reflects its franchise centric business model, which provides a more stable earnings stream and low capex requirements, as well as the good diversity with its multi-branded hotel portfolio, geographic diversity, and very good liquidity.

However, the ratings also reflect Choice's relatively weak credit metrics, particularly debt and cash flow metrics as well as an aggressive financial policy in regards to shareholder initiatives. The ratings also consider the company's modest level of revenues and earnings versus its peers, the agency said.

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