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Moody's downgrades NCO
Moody's Investors Service said it downgraded the corporate family rating of NCO Group, Inc. to B3 from B2 and affirmed the SGL-3 speculative grade liquidity rating.
The company also lowered the $549 million senior secured term loan due 2013 and $100 million senior secured revolver due 2011 to B1 (LGD 2, 27%) from Ba3 (LGD 3, 30%), its $165 million senior floating-rate notes due 2013 to Caa1 (LGD 5, 73%) from B3 (LGD 4, 66%) and $200 million senior subordinated notes due 2014 to Caa2 (LGD 6, 90%) from Caa1 (LGD 6, 91%).
The outlook was changed to stable from negative.
The downgrade reflects an anticipated decline in profitability in NCO's ARM and CRM business lines during 2010, according to the agency.
Ratings are supported by expectation that NCO will use free cash flow to pay down debt during 2010, the agency said.
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