Moody’s lowers Monitronics

Moody’s Investors Service said it downgraded Monitronics International, Inc.’s corporate family rating to B3 from B2 and probability of default rating to B3-PD from B2-PD.

Moody’s also said it downgraded the company’s $1.25 billion of first-lien senior secured bank debt to B1 (LGD 3) from Ba3 (LGD 3) and $585 million senior unsecured notes to Caa2 (LGD 5) from Caa1 (LGD 5).

Moody’s affirmed the company’s SGL-3 speculative grade liquidity rating.

The outlook also was changed to negative from stable.

The downgrades reflect the company’s weaker-than-expected operating performance in 2015 and the potential for further increases in customer attrition rates in 2016, the agency said.

Moody’s also said it expects another year of negative free cash flow in 2016, which will lead to increased reliance on the revolving credit facility that matures in December 2017.

The company will face heightened operational and market risks this year as it seeks to rein-in expenses, improve high attrition and adjust its dealer-only model to increasing costs for acquiring subscribers, the agency said.

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