Moody's assigns Lowell bond B1

Moody's Investors Service said it assigned a B1 rating with a stable outlook to the £115 million long-term senior secured bond issued by Lowell Group Financing plc, a subsidiary of Lowell Finance Holdings Ltd.

Moody's said the B1 rating reflects Lowell's strong market positioning, stable operating cash flow and satisfactory level of debt service capability and tangible common equity. However, these factors are partly constrained by the firm's monoline business model, concentrated debt maturity profile, supplier (i.e. debt originators) concentration and model risk in terms of valuation and pricing of its purchased debt portfolio (i.e. the risk of the models over-estimating projected cash flow generation of a portfolio of purchased debt).

The rating also reflects the increase in gross leverage following the bond issuance, which limits Lowell's financial flexibility.

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