Moody’s downgrades Sungard

Moody’s Investors Service said it downgraded Sungard Availability Services Capital, Inc.’s corporate family rating to B3 from B2 and probability of default ratings to B3-PD from B2-PD.

Moody’s also said it downgraded the ratings on the $250 million senior secured revolving credit facility due 2018 and $1.025 billion senior secured term loan due 2019 to B1 (LGD 3) from Ba3 (LGD 3), along with the $425 million senior unsecured notes due 2022 to Caa2 (LGD 5) from Caa1 (LGD 5).

The outlook was changed to stable from negative.

The downgrades reflect an expectation that the company’s profits will continue to decline through 2016 by more than 10% with stabilization occurring in 2017, Moody’s explained.

The company’s adjusted debt-to-EBITDA ratio should rise to more than 5x by the end of 2016, the agency said, though free cash flow will likely be negative through 2017.

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