Moody's rates Hilton loans Ba3, notes Ba3, B3

Moody's Investors Service said it assigned a B1 corporate family rating and B1-PD probability of default Rating to Hilton Worldwide Finance, LLC (the "restricted group"), a newly formed wholly owned subsidiary of Hilton Worldwide Holdings Inc. The outlook is stable.

The agency also assigned a Ba3 (LGD3, 32%) rating to Hilton's proposed senior secured debt offering comprised of a $1 billion revolving credit facility due 2018, an $850 million term loan B-1 due 2018, a $5 billion term loan B-2 due 2020 and $1.25 billion of senior secured first-priority notes due 2021 and a B3 (LGD5, 86%) rating to Hilton's proposed $2 billion senior unsecured notes, which will consist of 2021 and 2023 maturities.

The proceeds of the proposed debt will be used to refinance the company's existing debt.

The agency said the B1 corporate family rating reflects leverage that is high for the rating category, particularly in light of the industry's sensitivity to economic cycles that can lead to significant earnings pressure at times.

The ratings also reflect Hilton's large scale of global operations, well-recognized brands, good diversification by geography and industry segment and the low capital intensity of the company's hotel management and franchise business segment, which should help Hilton weather cyclical downturns, Moody's said.

Moody's estimates Hilton's 2013 adjusted debt-to-EBITDA ratio will be about 6.9 times, 6.5 times if the contemplated initial public offering is consummated.

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