Moody's ups Sunstate to positive, rates notes Caa2

Moody's Investors Service said it assigned a Caa2 (LGD 5, 74%) rating to Sunstate Equipment Co., LLC's proposed $170 million of second-priority senior secured notes due 2017.

The outlook was changed to positive from stable based on the company's recent improvement in operating performance, Moody's said.

The agency also said it affirmed the company's corporate family rating at Caa1, probability of default rating at Caa1, existing $108 million of 10½% second-lien notes due April 2013 at Caa2 (with its LGD 5, 79% revised from LGD 5, 77%).

The agency said it did not rate the company's proposed $165 million asset-backed loan.

The proceeds will be used to repay amounts outstanding under Sunstate's existing second-lien notes and borrowings under the existing asset-backed facility, the agency said.

The rating on the 10½% second-lien notes will be withdrawn upon conclusion of the transaction.

Moody's said it views the refinancing as beneficial as it would lengthen Sunstate's debt maturity profile and provide incremental liquidity.

The change in outlook reflects an expectation of a moderate improvement in the overall U.S. equipment rental markets, the agency said.

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