Moody's ups Quad liquidity

Moody's Investors Service said it revised Quad/Graphics, Inc.'s speculative-grade liquidity rating to SGL-2 from SGL-3 and affirmed the company's Ba2 corporate family and probability of default ratings as well as the Ba2 (LGD3, 44% from LGD3, 46%) rating for Quad's bank credit facility.

The outlook is stable.

The revision reflects gradually improving cash flow, $443 million of its $530 million revolving credit facility being available for draw-down and ample financial covenant compliance cushion, the agency said.

The ratings are based on expectations that free cash flow will improve with the successful integration of World Color, the agency said. While trailing pro forma debt-to-EBITDA leverage in the mid 3 times range is moderate, an ongoing lack of free cash flow related to restructuring activities constrains ratings.

The stable outlook considers the company's opportunity to further de-lever somewhat off-set by very weak industry fundamentals, the agency added.

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