Moody's upgrades Sonic Automotive

Moody's Investors Service said it upgraded to B2 from Caa1 the corporate family and probability-of-default ratings of Sonic Automotive, Inc., and kept ratings on review for further upgrade.

The agency also raised the senior guaranteed subordinated notes to Caa1 (LGD6, 90%) from Caa3 (LGD5, 84%) and senior convertible subordinated notes to Caa1 (LGD 6, 96%) from Caa3 (LGD 6, 95%).

The actions follow Sonic's recent establishment of a new working capital and floorplan revolving credit facility, replacing a credit facility set to expire in February 2010.

"This new credit facility, while smaller in size than the predecessor, should provide Sonic with sufficient liquidity, and removes a significant short-term ratings issue," Moody's senior analyst Charlie O'Shea said in a statement.

"This new facility serves to round out the reconfiguring of the company's capital structure that was necessary for Sonic to maintain adequate liquidity," O'Shea said.

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