Moody's upgrades L Brands

Moody's Investors Service said it upgraded L Brands, Inc. corporate family rating to Ba3 from B2 and its probability of default rating to Ba3-PD from B2-PD. The agency also boosted the company's senior unsecured guaranteed notes to Ba3 from B2 and the senior unsecured unguaranteed notes to B2 from Caa1. The speculative grade liquidity rating was upgraded to SGL-1 from SGL-2. The outlook was changed to stable from positive.

“The upgrade reflects governance considerations, particularly L Brands $1 billion debt repayment, including the $750 million of senior secured notes which were issued at the onset of the pandemic,” Moody’s said in a press release.

The speculative grade liquidity rating upgrade to SGL-1 from SGL-2 reflects L Brands’ substantial excess cash of $3.9 billion at fiscal year-end before the $1 billion planned debt reduction and expected free cash flow generation in 2021 with no mandatory debt maturities over the next 12-18 months, the agency said.

The outlook reflects that Bath and Body Works' outsized performance benefitted from significant tailwinds from a change in consumer spending caused by the pandemic, Moody’s said.

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