Moody’s cuts Froneri, rates loans B1, B3

Moody’s Investors Service said it downgraded the corporate family rating of Froneri International Ltd. to B1 from Ba3, its probability of default rating to B1-PD from Ba3-PD, and assigned a B1 rating to the proposed senior secured term loan and a B3 instrument rating for the proposed second-lien term loan at the newly created Froneri Lux FinCo Sarl and Froneri US, Inc. Moody’s also assigned a B1 rating to the new revolver at Froneri International.

The ratings for Froneri’s existing term loans and revolver remain unchanged and will be withdrawn upon repayment. The outlook is stable.

“The downgrade reflects a sharp increase in Froneri’s leverage following the refinancing and acquisition of Nestle.’s U.S. ice cream business, which is only partially mitigated by the company’s strong business profile and sound track record of realizing cost savings and integration of large M&A,” said Egor Nikishin, Moody’s lead analyst for Froneri, in a press release.

On Tuesday, Froneri announced plans to refinance the capital structure and fund the acquisition of Nestle’s U.S. ice cream business with a mix of new debt, shareholder loan and equity from its owners, Nestle and PAI. Moody’s views the acquisition as strategically sound However, around 75% of the $4 billion acquisition price will be covered with debt. As a result, Froneri’s Moody’s adjusted debt / EBITDA is expected well above 7x compared 4.1x as of September.

S&P trims Bruin E&P Partners

S&P said it downgraded Bruin E&P Partners LLC to CCC+ from B-. S&P also lowered the rating on the company’s unsecured notes due 2023 to B- from B. The 2 recovery rating was unchanged, reflecting an expectation of a substantial (70%-90%, rounded estimate: 85%) recovery in the event of a payment default.

“The downgrade incorporates our view of increased credit risk as Bruin contends with lower production, tight liquidity, and covenant headroom, as well as debt-trading levels well-below par – which we believe indicates a higher probability of a conventional default or distressed debt exchange in the future,” said S&P in a press release.

The outlook is negative.

Moody’s upgrades Compass Group

Moody’s Investors Service said it upgraded Compass Group Diversified Holdings LLC’s corporate family rating to Ba3 from B1 and probability of default rating to Ba3-PD from B1-PD. Moody’s also upgraded the senior secured revolver rating to Ba2 from Ba3 and the senior unsecured notes rating to B2 from B3. The speculative grade liquidity rating remains SGL-1. The outlook is stable.

The upgrades conclude the review for upgrade started on Nov. 26, following the announcement of a preferred equity issuance and term loan repayment on Nov. 21.

“The upgrade reflects Compass’ strengthened balance sheet following the repayment of $299 million term loan and management’s public commitment to a more conservative financial policy that targets leverage of 2.5x to 3x (as per the credit agreement). It also reflects Moody’s expectations that the company will pursue a prudent acquisition strategy while maintaining financial flexibility and moderate leverage below 4x Moody’s adjusted debt-to-EBITDA,” Moody’s said in a press release.

S&P ups Pixelle

S&P said it raised the ratings for Pixelle Specialty Solutions LLC and its credit facility to B from B-. The recovery rating of 3 is unchanged.

The company entered into a definitive agreement to acquire two specialty paper mills from Verso Corp. for about $365 million. Pixelle will fund the acquisition with about $50 million of cash on hand, a $255 million incremental term loan and an about $80 million cash equity contribution from Lindsay Goldberg.

The outlook is stable.

S&P revises SuperMoose Newco view to negative

S&P said it revised the outlook on SuperMoose Newco Inc., which does business as CentralSquare Technologies, to negative from stable and affirmed the B ratings on the company and its first-lien debt. S&P also affirmed the CCC rating on the second-lien debt.

“The negative outlook reflects our expectation that CentralSquare will generate negative free operating cash flow (FOCF) in 2019 due to a decline in its professional services revenue and issues with its accounts receivable collection. In addition, we expect that the company will have to continue to draw on its revolver in 2020 and beyond,” said S&P in a press release.

Moody’s shifts Delta Air view to positive

Moody’s Investors Service said it changed the outlook for Delta Air Lines, Inc. to positive from stable.

“Moody’s expects 2020 will be another strong year for Delta’s operating performance. Steady cash generation and sustaining margins and debt-related credit metrics near current levels in light of potential pressure on industry fundamentals from geo-political and or global macro conditions would support a ratings upgrade,” said Jonathan Root, a Moody’s senior vice president and lead analyst, in a press release.

The positive outlook anticipates sustained reliability of operations, and competitive operating margin and free cash flow over the cycle. Moody’s expects little reduction of funded debt as investment in the fleet and airport facilities increases and share repurchases remain a priority in upcoming years. The outlook reflects Moody’s expectation U.S. airlines will continue to emphasize earning acceptable returns on invested capital, which will lead to capacity reductions and cost management when economic growth slows.

Moody’s also affirmed Delta’s debt ratings at Baa3 and the ratings on all of Delta’s Enhanced Equipment Trust Certificates.

Moody’s reviews Pixelle for upgrade

Moody’s Investors Service said it placed the ratings of Pixelle Specialty Solutions, LLC, including the B2 corporate family rating, under review for upgrade due to an expected acquisition of two specialty paper mills from Verso Corp. (unrated) for $400 million, including the assumption of a $35 million pension liability.

The transaction is credit positive because it improves Pixelle’s operational diversity, increases its vertical integration into pulp and adds new specialty products and end markets. Credit metrics will remain strong, even after the issuance of added debt, Moody’s said.

Pixelle is financing the acquisition with about $50 million of cash, about $80 million of cash equity contribution from sponsor Lindsay Goldberg, and a $255 million incremental term loan. The transaction is subject to shareholder approval on January 31.

Moody’s reviews Wesco for downgrade

Moody’s Investors Service said it placed all ratings of Wesco International, Inc., including the Ba3 corporate family rating and Wesco Distribution, Inc.’s B1 senior unsecured rating, under review for downgrade. This action follows the announced merger agreement with Anixter International Inc.

On Jan. 13, Anixter and Wesco announced their respective boards of directors approved a definitive merger agreement to let Wesco acquire Anixter in a transaction valued at $4.5 billion. The transaction is expected to be funded with cash, Wesco stock and perpetual preferred stock and is expected to close in the second or third quarter of 2020.

“The acquisition would consolidate one of Wesco’s competitors in data security and utilities while strengthening its position in Anixter’s core wire and cable segment,” said Griselda Bisono, a vice president, senior analyst at Moody’s, in a press release. “Nonetheless, the combination with Anixter represents a highly transformative acquisition for Wesco, bringing with it integration risk and much higher leverage.”

The rating review will focus on the effect of the transaction on Wesco’s capital structure, liquidity and forward-looking cash flow of the combined company as well as plans to reduce acquisition debt.

S&P rates Assemblin Financing B

S&P said it assigned B ratings to Assemblin Financing AB and its senior secured notes. The recovery rating on the notes is 3.

The company refinanced its debt with €250 million of senior secured notes, which the issuer expects to hedge into Swedish krona in the near term. The financial sponsor received a dividend of €93 million as part of this transaction.

“Our assessment of Assemblin also reflects its solid market position in Sweden, where it generates 82% of revenue and is the No. 2 market player behind Bravida Holding AB. The company continues to diversify into Norway and Finland through core competencies in these countries, including heating and sanitation, particularly in Oslo, and automation in Finland,” said S&P in a press release.

The outlook is stable.

Fitch assigns BB to PBF notes

Fitch Ratings said it assigned a BB/RR4 to PBF Holding Co. LLC’s proposed unsecured note offering. The issuer default rating is BB and the outlook is positive. The company plans to offer $1 billion of senior unsecured notes due 2028 and use the proceeds to fund the redemption of its 7% senior unsecured notes due 2029 and for general corporate purposes, including partially financing the acquisition of the Martinez Refinery.

PBF’s ratings reflect its geographically diversified portfolio of refineries, moderate size, the high complexity of its refineries, strategic integration with PBF Logistics LP, success in integrating and organically growing its refineries and credit metrics commensurate with the BB category.

This is offset by the refining industry’s inherent volatility, regulatory overhang, large swings in working capital, potential disruptions from turnarounds, competitive conditions, particularly on the East Coast and an acquisitive business strategy.

Moody’s rates PBF notes B1

Moody’s Investors Service said it assigned B1 ratings to PBF Holding Company LLC senior unsecured notes.

The notes are rated at the same level as the 2023 and 2025 senior guaranteed unsecured notes of PBF and one notch below PBF’s Ba3 corporate family rating, reflecting the size and strong collateral package of the revolving credit facility. The revolver is secured by liquid assets, including deposit accounts, accounts receivable and all hydrocarbon inventory to which PBF holds title.

The placement of new notes comes ahead of the closing of the $970 million acquisition of Shell’s Martinez refinery, which is pending regulatory approvals. Moody’s expects the company will use the proceeds as well as its substantial cash balances to fund the acquisition.

Moody’s maintains a negative outlook on all ratings of PBF reflecting operating and financial risks associated with the acquisition of the refinery.

Moody’s gives B2 to Andromeda add-on

Moody’s Investors Service said it assigned a B2 rating to Andromeda Investissements’ €65 million new senior secured term loan B4 tranche issuance. Andromeda’s existing ratings, comprising of B2 corporate family rating, B2-PD probability of default rating, and B2 ratings on the company’s existing senior secured facilities remain unaffected.

“In fact, despite the increase in debt amount, we expect the group’s Debt/EBITDA ratio to remain between 5x and 6x over the next 12 months, which is consistent with B2 rated peers. The stable outlook remains unaffected,” Moody’s said in a press release.

The B2 rating on Andromeda reflects April SA’s strong business profile and competitive position within the wholesale broking business in France, its solid profitability, and the resilience and predictability of its earnings. Andromeda’s rating is constrained by its limited diversification outside the French market, and a weak financial profile resulting from the leveraged buy-out, the agency said.

The debt add-on will fund the acquisition of the shares in April that Andromeda doesn’t already own. The planned debt add-on of €65 million, which is within Moody’s assumption, will increase the group’s total reported borrowings to €564.5 million, but will maintain its leverage within Moody’s expectations.

Moody’s: Cable & Wireless loan Ba3

Moody’s Investors Service said it assigned a Ba3 rating to the proposed $1.3 billion senior secured term loan due January 2028, with Coral-US Co-Borrower LLC as borrower. Coral-US is a subsidiary of Cable & Wireless Communications Ltd.

Proceeds will be used to partially repay a $1.64 billion term loan B-4 due January 2026 and cover transaction costs.

The Ba3 corporate family rating of Cable & Wireless and the ratings of the other debt instruments within the group remain unchanged. All outlooks are stable.

The Ba3 rating on the new senior secured term loan considers it pari passu with the existing senior secured term loan B-4 and the $400 million senior secured notes issued by Sable International Finance Ltd., both rated Ba3. The new term loan benefits from the same guarantees as the existing term loan B-4 and is similarly secured by share pledges over the guarantors.

S&P gives PBF notes BB

S&P said it assigned its BB issue-level rating and 3 recovery rating to PBF Holding Co. LLC’s proposed $1 billion senior unsecured notes due 2028. The 3 recovery rating indicates an expectation of meaningful (50%-70%; rounded estimate: 65%) recovery in the event of a default.

The company intends to use the proceeds to fund a portion of the upcoming acquisition of the Martinez refinery from an affiliate of Royal Dutch Shell and to refinance the $500 million of senior notes due 2023.

“We expect the acquisition to modestly improve PBF’s size and scale, while credit measures remain in line with the rating. As of Sept. 30, 2019, PBF Holding had about $1.26 billion of debt outstanding,” said S&P in a press release.

Moody’s revises Brixmor view to positive

Moody’s Investors Service said it changed the rating outlook of Brixmor Property Group Inc. and its subsidiary Brixmor Operating Partnership LP to positive from stable.

“The positive outlook reflects Brixmor’s demonstrated success in executing its portfolio transformation initiative with mark-to-market opportunities to offset potential near-term tenant bankruptcies and store closures,” said Moody’s in a press release.

In the same rating action, Moody’s also affirmed all its ratings on Brixmor, including Brixmor Operating’s Baa3 issuer and unsecured debt ratings.

Fitch assigns CyrusOne notes BBB-

Fitch Ratings said it assigned a BBB- rating to the senior unsecured notes expected to be issued by CyrusOne LP. The outlook is stable.

Proceeds are expected to be used to repay euro-denominated debt and for general corporate purposes.

The ratings consider the high quality and strong locations of CyrusOne’s owned and operated data center portfolio assets, in the context of strong secular demand growth due to higher data utilization.

The company’s credit protection metrics are appropriate for a BBB- U.S.-equity REIT with the company's operational scale and asset profile. CyrusOne’s evolving liability profile and less developed capital access balance these credit positives. The company also has moderate tenant concentration risk mitigated by strong tenant credit quality, the agency said.

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