Moody's cuts Generac, rates loan B1, instruments Caa1

Moody's Investors Service said it downgraded Generac Power Systems, Inc.'s corporate family rating to B2 from Ba3 and probability of default rating to B2 from B1.

Moody's said the downgrades reflect the holding company's planned $685 million dividend distribution and the resulting increase in the company's leverage upon completion of the proposed transaction.

Concurrently, Moody's assigned a B1 to the proposed $800 million term loan B and Caa1 to the proposed $425 million senior unsecured instruments.

The proposed transaction will also refinance its existing debt. Moody's also assigned a speculative grade liquidity rating of SGL-2 to reflect the company's good liquidity.

The outlook is stable.

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