Moody's ups SoftLayer

Moody's Investors Service said it raised SoftLayer Technologies, Inc.'s probability of default rating to B1 from B2.

Given the higher proportion of operating lease obligations in SoftLayer's capital structure following the company's recent expansion, Moody's also said it lowered the recovery rate assumption from 65% to 50% and the probability of default rating is now in line with the corporate family rating of B1.

Moody's also said it affirmed the company's B1 corporate family rating and the B1 rating on the company's senior secured credit facility.

The outlook is stable.

The ratings reflect the company's recent expansion following the acquisition of thePlanet in November 2010, Moody's said, and strong margins.

The agency said it remains concerned about the longer term sustainability of its cash flow stream, along with the challenges associated with solidifying a defensible competitive position in the data center services industry.

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