Moody's rates Compass Diversified loans Ba1

Moody's Investors Service assigned a Ba3 corporate family rating and a B1 probability of default rating to Compass Diversified Holdings.

Moody's assigned the $300 million undrawn senior secured revolving credit facility a Ba1 rating (LGD2, 13%), the $200 million senior secured term loan a B1 rating (LGD4, 52%) and a speculative grade liquidity rating of SGL 1.

The outlook is stable.

Proceeds will be used to refinance $40 million of existing debt and to help fund acquisitions.

Compass' credit profile benefits from its strong industry diversification with seven majority-owned subsidiaries operating in seven unrelated industries. The company's Ba3 rating is supported by its strong cash flow relative to debt, Kevin Cassidy, vice president and senior credit officer at Moody's, said in a written statement.

The ratings are constrained by the high level of cash distributions to shareholders, the lack of significant geographic diversification outside of the United States and by the company's limited track record, the agency said.

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