Moody's upgrades Guitar Center

Moody's Investors Service said it raised Guitar Center Inc.'s ratings, including the corporate family rating to B2 from B3, the probability of default rating to B2-PD from B3-PD and the senior secured notes rating to B3 from Caa1.

The higher ratings reflect Guitar Center's earnings growth and liquidity improvement since its emergence from bankruptcy in December, the agency said. Moody's-adjusted debt/EBITDA has declined to 3.2x as of July 31, from 4.6x at the time of the exit financing.

"Guitar Center has significantly recovered coming out of the pandemic and is operating with a much lighter debt load following the bankruptcy," said Moody's analyst Raya Sokolyanska. "Continued strength in consumer spending and a recovery in the instrument rental business should support operating performance, despite broad pressures from rising costs and supply chain bottlenecks."

The outlook remains stable.

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