Moody's cuts Synagro

Moody's Investors Service said it downgraded Synagro Technologies, Inc.'s corporate family and probability-of-default ratings to B3 from B2, first-lien senior secured rating to B1 from Ba3 and second-lien senior secured rating to Caa2 from Caa1.

The outlook was changed to negative from stable.

The downgrades were prompted by operating results that trail the levels that Moody's said it had anticipated the company would achieve in 2007.

The B3 corporate family rating reflects Moody's belief that credit metrics are likely to remain near current levels over the intermediate term because of anticipated debt-funded construction projects required to meet Synagro's growth plans, the agency said.

The combination of delays in execution of Synagro's recent facility contract awards and the potential of fluctuating processing volumes at contracted facilities could affect the company's ability to maintain compliance with financial covenants, particularly as these become more restrictive over time, the agency noted.

Ratings could be upgraded if Synagro were to sustain a debt-to-EBITDA ratio below 6 times and downgraded if it were to rise above 7.5 times.

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