Moody's lifts OSI to SLG-2

Moody's Investors Service said it upgraded OSI Restaurant Partners, Inc.'s speculative-grade liquidity rating to SGL-2 from SGL-3 and changed the outlook to stable from negative.

The agency also affirmed the company's corporate family and probability-of-default ratings at Caa1, its $150 million working capital revolver due 2013, $100 million pre-funded revolver due 2013 and $1.31 billion term loan B due 2014 at B3 (LGD3, 39%) and its $550 million senior unsecured notes due 2015 at Caa3 (LGD5, 89% ).

Moody's said it changed the outlook because while it expects debt protection metrics will only marginally improve from current levels, it believes they will remain within a range appropriate for the current ratings.

The SGL-2 rating indicates good liquidity and reflects the agency's view that OSI will be able to fund all of its cash requirements through internal cash flows and cash balances and will maintain an adequate cushion with regards to its financial covenants.

The Caa1 corporate family rating balances OSI's significant leverage, weak consumer demand trends and continued intense competition in the casual dining segment against the company's large scale, good diversification and good liquidity, Moody's said.

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