Moody's: Generac, loan Ba3

Moody's Investors Service said it assigned a Ba3 corporate family rating and a B1 probability of default rating to Generac Power Systems, Inc., a wholly owned subsidiary of Generac Holdings Inc.

In a related action and as part of the company's general refinancing, Moody's also said it assigned a Ba3 rating (LGD 3, 33%) to the company's proposed $150 million revolving credit facility and about $575 million senior secured first-lien term loans A and B.

The outlook is stable.

The proposed credit facilities, along with existing cash, will be used to repay its existing first-lien term loan B, Moody's said.

The revolver is expected to remain undrawn at the close of the transaction.

The ratings incorporate the company's strong niche market position and broad established distribution dealer network, modest leverage of about 3.7x as at the close of the transaction and strong cash flow generation, Moody's said.

The ratings also are supported by Generac's good liquidity profile, the agency said.

The ratings are restrained by the company's weather-driven revenue volatility and margin seasonality, geographic concentration and limited product offering, Moody's said.

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