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Moody's drops OSI to Caa1
Moody's Investors Service said it downgraded corporate family and probability-of-default ratings of OSI Restaurant Partners, LLC to Caa1 from B2 and the senior unsecured ratings to Caa3 (LGD5, 86%) from Caa1 (LGD5, 85%) and senior secured ratings to B3 (LGD3, 33%) from B1 (LGD3, 33%).
The outlook is stable.
According to the agency, the downgrades reflect the company's weaker-than-expected operating performance and debt protection measures as a deteriorating macroeconomic environment, cost inflation and competitive pressures continue to weigh heavily on consumer spending and this issuer's margins, earnings and cash flow.
Moody's said the Caa1 corporate family rating reflects OSI's relatively weak operating performance, high leverage and weak interest coverage.
Ratings also reflect increasing consumer weakness and economic uncertainties that will continue to hurt operating performance and make it difficult for OSI to materially improve earning over the intermediate term, the agency said.
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