Moody’s rates SeaWorld notes Caa2

Moody’s Investors Service said it assigned a Caa2 rating to SeaWorld Parks & Entertainment, Inc.’s planned $400 million of second-priority senior secured notes due 2025. The agency also upgraded the senior secured credit facility and secured notes to B2 from B3, and the probability of default rating to B3-PD from Caa1-PD.

Proceeds will be used the repay $311 million of borrowings on SeaWorld’s revolver and add cash to the balance sheet.

“The upgrade of the first-lien credit facility and notes reflects the addition of second-lien debt, which provides a loss absorption cushion. With the dual-class debt structure, the senior secured credit facilities rank senior to the second-lien debt, resulting in a one-notch lift above the B3 CFR. The PDR was also upgraded to reflect an average family recovery of 50%, as opposed to the previous 65% recovery assumption when there was only one class of first-lien debt,” Moody’s said in a press release.

Moody’s said it expects the improved liquidity to help SeaWorld manage through 2021 even if the pandemic continues to disrupt operations at its parks.

The outlook remains negative.

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