Moody’s gives Caa1 to Gates Global notes

Moody’s Investors Service said it assigned a Caa1 rating to Gates Global LLC’s proposed senior unsecured notes due 2026.

Proceeds along with cash on hand are expected to be used to redeem the company’s $568 million senior unsecured notes due 2022 and pay fees and expenses.

Gates’ other ratings are unchanged, including the B2 corporate family rating, Moody’s said.

“The ratings reflect Gates’ exposure to the cyclical capital goods and auto end markets that will remain pressured by slowing industrial activity and macroeconomic headwinds through at least 2020, along with currency translation risk given about 60% of revenue is generated outside of the US. These factors have weakened credit metrics, with lower-than-expected earnings driving up leverage to about 5x debt/EBITDA (including Moody’s standard adjustments),” said Moody’s in a press release.

The outlook is stable.

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