Moody's rates Jack in the Box loans Ba3

Moody's Investors Service said it assigned a Ba3 rating (LGD3, 38%) to Jack in the Box Inc.'s proposed $400 million senior secured revolving credit facility and $200 million senior secured term loan.

Moody's affirmed the company's Ba3 corporate family rating and B1 probability-of-default rating.

The outlook is negative.

Proceeds from the new term loan and revolver will be used to refinance Jack-in-the-Box's existing $150 million senior secured revolver and $475 million senior secured term loan.

"The affirmation of Jack-in-the-Box's Ba3 corporate family rating reflects relatively weak debt protection metrics, high geographic concentration, strong brand recognition, moderate business risk, meaningful scale and good liquidity," Bill Fahy, a Moody's senior analyst, said in a statement.

"The ratings also acknowledge that Jack-in-the-Box's leverage is currently higher than what we view as acceptable for a Ba3 rated company. However we expect that the company will reduce leverage and improve coverage to more acceptable levels over the intermediate term," Fahy said.

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