Moody's hikes Downstream Development

Moody's Investors Service said it raised Downstream Development Authority's corporate family rating and the rating on the company's $270 million of senior secured notes due Feb 2023 to Caa1 from Caa3 and its probability of default rating to Caa1-PD from Ca-PD.

“The upgrade of DDA's corporate family rating to Caa1 considers that the company's default risk has been significantly reduced as a result of its strong EBITDA performance––EBITDA has grown steadily despite the challenges related to the coronavirus––and significant reduction in debt/EBITDA, from 6.8x for the LTM period ended Sept. 30, 2020 to 3.3x for the LTM period ended June 30, 2021.

However, the rating also acknowledges that despite its better EBITDA performance and leverage improvement, there is a risk to refinancing the notes due in 2023, Moody’s said.

“The upgrade of the PDR to Caa1-PD additionally reflects the return to a 50% mean family recovery rate estimate along with the reduction in near-term default risk,” the agency said.

The outlook is stable.

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