Moody's rates Hub notes Caa2

Moody's Investors Service said it assigned a B3 corporate family rating and a B3-PD probability of default rating to Hub Holdings, LLC, a newly formed indirect holding company for Hub International Ltd., and a Caa2 (LGD6, 94%) rating to $380 million of senior notes being issued by the new holding company and Hub Holdings Finance, Inc. The outlook is negative.

The agency also affirmed Hub International’s $225 million senior secured revolving credit facility due 2018 and $1.9 billion senior secured term loan due 2020 at B1 (LGD2, 29%), its $950 million senior notes due 2021 at Caa2 (LGD5, 80%) and Hub International Canada West ULC’s C$50 million senior secured revolving credit facility due 2018 at B1 (LGD2, 29%).

Note proceeds will be used to pay a cash distribution of about $368 million to equity holders.

The agency said the negative outlook reflects the highly aggressive financial leverage and use of proceeds under the proposed transaction, just nine months after Hub completed a $4.5 billion leveraged buyout sponsored by private equity firm Hellman & Friedman. Moody's estimates that the new debt will boost Hub's ratio of debt to EBITDA to about 8.6 times.

Hub's ratings reflect its solid market position in North American insurance brokerage, good diversification across products and geographic areas and strong operating margins, Moody’s said.

In the agency’s view, these strengths are tempered by the company's high financial leverage and limited interest coverage.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.