Finastra term loan drops on downgrade; Michaels a little weaker with ratings cut

By Sara Rosenberg

New York, Oct. 14 – Finastra Ltd.’s (Misys) U.S. first-lien term loan experienced a significant decline in trading levels on Friday after its ratings were lowered by S&P Global Ratings, and Michaels Cos. Inc.’s term loan was slightly lower following its ratings downgrade.

Finastra’s U.S. first-lien term loan weakened to around 80 bid, 83 offered on Friday from around 86 bid, 87 offered on Thursday after the debt and the corporate ratings were lowered to CCC+ from B- by S&P, a trader remarked.

The rating agency said it lowered Finastra’s ratings because of the belief that its capital structure is unsustainable, indicated primarily by weak free cash flow, persistent double-digit leverage, and large debt maturities in the next two years.

Michaels’ term loan was quoted at 80 1/8 bid on Friday, a touch weaker from Thursday’s levels, sources said. One source had the loan at 80¼ bid on Thursday and another source had the loan at 80½ bid, 82 offered on Thursday.

On Friday, S&P downgraded Michaels’ term loan and issuer credit rating to B- from B, with a negative outlook.

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