Moody's cuts CareCentrix, view to negative

Moody's Investors Service said it downgraded CareCentrix, Inc.'s corporate family rating to B2 from B1 and the probability of default rating to B2-PD from B1-PD. Moody's also downgraded the ratings on the senior secured credit facilities to B2 from B1. The agency changed the outlook to negative from stable.

The downgrade of the CFR reflects Moody's expectation leverage will increase materially in 2021 as a result of the loss of CareCentrix's Cigna contract, which generated roughly half of its operating earnings in 2019. This contract ends in January 2021, when the customer will bring the services in-house. Moody's said it understands the non-renewal of the contract was not due to any performance issues on the part of CareCentrix. The downgrade also reflects a significant reduction in scale and free cash flow as a result of the loss. While the contract loss will materially weaken the company's financial profile, Moody's believes it will be partially mitigated by new business wins and cost reductions over the next 12-18 months. Moody's said it expects adjusted debt to EBITDA to peak above 8x in 2021 before improving to a range of 5-6x by the end of 2022.

The negative outlook reflects the considerable business risk as CareCentrix navigates through the loss of its largest customer. The loss of scale could intensify margin pressure and reduce the company's negotiating leverage both with providers and customers.

Moody’s downgrades Calfrac

Moody’s Investors Service said it downgraded Calfrac Holdings, LP’s corporate family rating to Caa2 from B3, its probability of default rating to Caa2-PD from B3-PD and its senior unsecured notes to Caa3 from Caa1. The speculative grade liquidity rating remains SGL-3 and the outlook remains stable.

The downgrade follows Calfrac’s announcement it intends to offer an exchange of its senior unsecured notes at 55% to 60% of par for up to $100 million of new secured second-lien notes. If completed, Moody’s said it would view this transaction as a distressed exchange leading to a limited default.

“The downgrade reflects a change in Calfrac’s financial policies which increases the risk of further distressed debt exchanges and additional limited defaults,” said Jonathan Reid, a Moody’s analyst, in a press release.

S&P cuts Calfrac

S&P said it downgraded the ratings on Calfrac Well Services Ltd. and its $650 million senior unsecured notes due 2026 to CC from CCC+. The 4 recovery rating on the debt is unchanged.

The downgrade follows Calfrac's Monday announcement the company launched an offer to exchange a portion of Calfrac Holding LP's 8½% senior unsecured notes due 2026 for up to $100 million of newly issued 10 7/8% second-lien secured notes due 2026 (unrated). Under the offer, the participating holders of the notes will receive $550-$600 of new notes per $1,000 principal of their notes (40%-45% below par). If the offer is fully subscribed, the company's overall debt would decline by $70 million - $80 million. The new notes will be secured by a second lien on the same assets that secure Calfrac's senior credit facility obligations.

The outlook is negative.

S&P cuts Doncasters

S&P said it lowered its rating on Doncasters Group to SD from CCC- and dropped the ratings on the company’s first- and second-lien facilities to D.

“We understand that Doncasters Group has received close to 100% lender support for its proposed financial restructuring, which we consider distressed,” said S&P in a press release.

The restructuring calls for 50% of the first-lien debt to be converted into Holdco payment-in-kind debt and equity in Alloy Topco Ltd., a new lender-owned company taking over the operating group. In addition, 20% of the second-lien debt will be converted into Holdco PIK debt and equity as part of the restructuring.

After the restructuring, the operating group is expected to have about £240 million of net debt and will have removed about £900 million of liabilities from its balance sheet.

S&P trims Elevate Textiles

S&P said it downgraded the ratings for Elevate Textiles Inc. and its first-lien facility to B- from B. The recovery rating remains a 3 indicating the expectation for meaningful (50% - 70%, rounded estimate 50%) recovery in the event of a payment default. In addition, S&P downgraded the second-lien term loan to CCC+ from B-. The recovery rating remains 5, indicating an expectation for modest (10% - 30%, rounded estimate 15%) recovery in the event of a payment default.

“More of Elevate's customers are looking to diversify their manufacturing footprints, which negatively affected its fabric division's China and Mexico operations. Because of weaker profitability, we now expect the company will end 2019 with leverage above 7x, which is higher than our previous expectation in the mid-6x area,” said S&P in a press release.

The outlook is negative.

Moody’s cuts Gigamon facilities

Moody’s Investors Service said it downgraded Gigamon Inc.’s first-lien senior secured bank credit facilities to B3 from B2. The downgrade of the facilities reflects the single class debt structure following the repayment of the second-lien term loan. To fund the repayment of the second-lien debt, Gigamon will raise an incremental $150 million of first-lien term loan fungible with its existing facility. The outlook is stable.

The agency also affirmed Gigamon’s B3 corporate family rating and B3-PD probability of default rating. The B3 CFR is driven by the very high leverage and weak cash flow generation, Moody’s said.

S&P cuts KC Culinarte

S&P said it lowered its ratings on KC Culinarte Holdings LP and its first-lien term loan and revolver to B- from B. The recovery rating remains 3.

“Our downgrade reflects the company's elevated leverage, minimal free cash flow generation, and potential liquidity risk if operational missteps persist. The downgrade reflects the company's EBITDA deterioration and higher-than-expected borrowings on its revolver due to integration challenges with its Everett, Wash. plant. We estimate that leverage increased above 8x for the fiscal year ended Sept. 30, 2019, compared with our prior expectation of below 7x. We forecast that leverage will remain high during the next 12 months as we anticipate for a longer-than-budgeted Everett facility turnaround. We also forecast no free cash flow generation for fiscal 2020,” S&P said in a press release.

The outlook is negative.

Moody’s trims Tanger Properties

Moody’s Investors Service said it downgraded Tanger Properties LP’s senior unsecured ratings to Baa2 from Baa1. The rating outlook remains negative.

The downgrade mirrors Tanger’s 2020 guidance for lower occupancy levels and negative same-store growth, with occupancy expected to be between 92% and 93% and same-store NOI guidance between (6.75%) and (8.25%). “The unprecedented amount of tenant bankruptcies, store closures and brand-wide retailer restructurings have and will continue to pressure Tanger’s historically high occupancy levels in the near-term,” said Moody’s in a press release.

Despite having sufficient liquidity and coverage metrics at the end of 2019 within the rating parameters for a Baa1 rated entity, Tanger’s operating trends are no longer commensurate with the rating category, the agency said.

Moody’s ups LifeMiles, view to stable

Moody’s Investors Service said it upgraded LifeMiles Ltd.’s senior secured and corporate family ratings to B1 from B2. The outlook has been revised to stable from negative.

The upgrade to B1 mainly reflects an improvement in its main shareholder, Avianca Holdings SA’s credit profile, reducing the risk of LifeMiles upstreaming extraordinary cash flows, either in the form of dividends, most likely financed with incremental debt or anticipated purchases of airline tickets. The recovery in Avianca’s liquidity follows a debt exchange concluded on Dec. 31, and the availability of new credit facilities. However, Avianca’s credit profile remains weak creating risks for LifeMiles’ credit quality and overall operation.

The stable outlook reflects Moody’s view the company will maintain adequate liquidity and credit metrics.

Moody's upgrades Vizient

Moody's Investors Service said it upgraded the ratings of Vizient, Inc., including the corporate family rating to Ba3 from B1 and probability of default rating to Ba3-PD from B1-PD. Moody's also upgraded the senior secured revolving credit facility and term loan ratings to Ba2 from Ba3 and the senior unsecured notes rating to B2 from B3. The outlook is stable.

The upgrade of the ratings reflects Vizient's improved earnings, liquidity and solid free cash flow. The upgrade is also supported by the company's track record of debt repayment and Moody's expectation this will continue. Moody's said it expects Vizient will maintain its debt to EBITDA below 3.5x as its solid free cash flow gives the company ample flexibility to fund tuck-in acquisitions while continuing to repay debt.

Fitch puts Delphi on positive watch

Fitch Ratings said it placed the ratings of Delphi Technologies plc on rating watch positive following its agreement to be acquired by BorgWarner Inc. in an all-stock transaction that values Delphi at about $3.3 billion. Delphi’s ratings apply to $800 million in senior unsecured notes.

The positive rating watch is driven by Fitch’s expectation that BorgWarner’s credit profile following the acquisition of Delphi will be substantially stronger than Delphi’s standalone credit profile. This is due to BorgWarner’s stronger pre-acquisition standalone credit profile, and its decision to acquire Delphi in an all-stock transaction with no incremental leverage.

Fitch estimates BorgWarner’s leverage will be in the mid-1x range at closing, and will decline slightly over the subsequent 24 months as the attainment of synergies leads to increased EBITDA. This compares to Delphi’s standalone EBITDA leverage of 3.4x at Sept. 30.

Fitch expects to upgrade Delphi’s ratings near the time of the closing. Fitch said it expects it will likely upgrade DLPH’s ratings several notches into the investment-grade range.

S&P puts Delphi on positive watch

S&P said it placed its BB- ratings on Delphi Technologies plc and the company’s first-lien debt on CreditWatch with positive implications.

The placement comes after Delphi entered a pact to be acquired by BorgWarner Inc.

“We now think there is potential for a higher rating on Delphi, on the basis that the merger will result in an entity that will be materially larger and more diversified than previously,” said S&P in a press release.

S&P said it expects BorgWarner to repay or assume all of Delphi’s rated debt after the transaction closes.

Fitch shifts PGS rating watch to positive

Fitch Ratings said it revised the rating watch on PGS ASA's B- issuer default rating to positive from negative to reflect the likelihood of refinancing completion. The transaction would substantially eliminate refinancing risk, which Fitch said it viewed as the primary rating constraint and which triggered the RWN in October. Coupled with the improvement in profitability and market recovery over the past three quarters, this could lead to positive rating action after the refinancing is completed.

PGS' refinancing plan includes a new 4.25 year $523 million term loan, effectively extending the existing term loan B maturity to March 2024, including a $150 million upsize, a new 3.75 year $215 million revolver, effectively extending the maturity of the outstanding revolver to September 2023 and issuance of $95 million of equity.

Completion of the $95 million private equity placement is subject to shareholder approval at the Feb. 13 extraordinary general meeting. Commitments on the term loan and revolver are subject to redemption of the $212 million of notes maturing in December 2020 and the completion of the equity issuance. The security package includes first-lien pledge on substantially all PGS' assets, excluding the four titan-class vessels

S&P gives Sprint notes B+, on watch

S&P said it assigned its B+ issue-level rating to Sprint Corp.'s proposed $1 billion of junior guaranteed notes due 2028 and placed the rating on CreditWatch with negative implications. S&P also assigned a 2 recovery rating, which indicates an expectation for substantial (70%-90%; rounded estimate: 85%) recovery in the event of payment default.

Proceeds will be used to refinance near-term debt maturities.

If Sprint closes on its merger with T-Mobile US Inc., the proposed notes will be redeemed at par per the mandatory redemption clause in the indenture. As a result, there would be no upside to the rating on this debt issue assuming a merger approval.

“We base the CreditWatch placement on this debt issue on the likelihood that we would lower the ratings in lock-step with the issuer credit rating on Sprint if the deal is not approved. Under a no-deal scenario, we could lower our ratings on Sprint at least one notch if we come to the determination that the capital structure is unsustainable longer-term and depending on our view of potential financial support by its parent company, SoftBank Corp.,” said S&P in a press release.

Moody’s shifts IHS view to positive

Moody's Investors Service said it revised to positive from stable the outlook for IHS Markit Ltd. The agency also affirmed the company’s corporate family rating at Ba1, probability of default rating at Ba1-PD and senior unsecured at Ba1. The speculative grade liquidity rating is SGL-1.

“Given its global scope, diverse products and attractive profitability and free cash flow profile, IHS Markit debt could be assigned investment-grade ratings if we expect the company can maintain mid-single-digit revenue growth while operating with balanced financial strategies,” said Edmond DeForest, a Moody's vice president and senior credit officer, in a press release.

The positive outlook reflects Moody's anticipation of fewer and smaller acquisitions, debt to EBITDA declining toward 3 times, some profitability rate expansion and sustained mid-single-digit revenue growth.

S&P revises Zotec view to positive

S&P said it revised the outlook for Zotec Partners LLC to positive from stable.

“The positive outlook reflects our belief that the company will continue to expand its EBITDA margins and improve financial performance, maintaining leverage below 5x and generating free operating cash flow (after capital expenditure, including capitalized software development costs) above $15 million. We expect continued operating performance will result in increased free cash flow generation and reduction of debt in 2020,” said S&P in a press release.

S&P affirmed Zotec’s B- rating and left the issue ratings unchanged.

S&P rates Arconic notes B+

S&P said it assigned its B+ issue-level rating and 6 recovery rating to Arconic Corp.'s proposed $400 million second-lien notes due in 2028. The 6 recovery rating indicates the expectation lenders would receive negligible recovery (0%-10%; rounded estimate: 0%) in the event of a payment default.

The company plans to use the proceeds to fund a distribution to parent Arconic Inc. before the companies separate in a few months.

All of S&P’s other ratings on Arconic, including the BB issuer credit rating, are unchanged. “Our rating on Arconic Corp. reflects the company's good position in a breadth of aluminum rolled products and a moderate debt load supplemented by heavy pension obligations and unknown potential liabilities from the Grenfell Tower fire. Arconic's French subsidiary manufactured the Reynobond PE exterior building panels, which have been discontinued,” said S&P in a press release.

Moody’s assigns B1 to Sprint notes

Moody’s Investors Service said it assigned a B1 rating to Sprint Corp.’s new $1 billion of senior unsecured junior guaranteed notes due 2028. All of Sprint’s credit ratings are on review for upgrade. Sprint intends to use the proceeds to refinance debt.

The incremental unsecured notes will provide long-duration debt capital and preserve Sprint’s secured debt capacity. The notes have a mandatory special redemption at par in the event Sprint’s merger with T-Mobile US, Inc. parent of T-Mobile USA, Inc. is completed.

The new senior unsecured junior guaranteed notes are rated B1, reflecting their senior ranking ahead of the senior unsecured notes of Sprint itself, Sprint Communications, Inc. and Sprint Capital Corp. and reflecting their subordinate ranking to the senior secured credit facility and other senior liabilities. The notes will be fully and unconditionally guaranteed by Sprint Communications on a senior unsecured basis. The obligations of Sprint Communications under its guarantee will in turn be guaranteed on a senior subordinated basis by its subsidiaries.

Moody’s rates Oaktree Specialty Baa3

Moody’s Investors Service said it assigned a Baa3 long-term issuer rating to Oaktree Specialty Lending Corp., a company externally managed by Oaktree Capital Management, LP.

Oaktree Specialty’s Baa3 long-term issuer rating is supported by the company’s low leverage, strong asset coverage ratio, improving asset quality as a result of the ongoing portfolio transition towards first-lien investments and prudent growth in a competitive lending environment. The rating also reflects the risks to creditors resulting from the lack of diversity in Oaktree’s funding structure, its lower percentage of first-lien loans compared to rated peers, its limited operating history under Oaktree’s management and its small competitive presence in the business development sector.

The outlook is stable.

Fitch rates Ovintiv BBB

Following its reorganization transactions and redomiciling in the United States, Fitch Ratings said it affirmed and withdrew the long-term issuer default ratings for Encana Corp. and Newfield Exploration Inc., at BBB, and assigned new long-term IDRs of BBB to Ovintiv, Inc., Ovintiv Canada ULC and Ovintiv Exploration Inc. Fitch affirmed the ratings of all existing unsecured debt of these entities at BBB The debt at these entities will be moved under its respective obligors. The outlook for these three entities is stable.

Moody's assigns Ovintiv Ba1

Moody's Investors Service said it assigned ratings to Ovintiv Inc. consisting of a Ba1 corporate family rating, Ba1-PD probability of default rating and an SGL-2 speculative grade liquidity rating. The outlook is positive.

The senior unsecured notes issued by Encana Corp. (now renamed Ovintiv Canada ULC) were affirmed at Ba1. The outlook remains positive. The notes have been legally assumed by Ovintiv Inc. and will be transferred to Ovintiv on the next business day. Encana Corp.'s Ba1 CFR, Ba1-PD PDR and SGL-2 ratings will be withdrawn.

The senior unsecured notes issued by Newfield Exploration Co. (now renamed Ovintiv Exploration Inc.) were also affirmed at Ba1 following the new guarantee provided by Ovintiv. The outlook was changed to positive from no outlook.

Moody’s assigns PTC notes Ba3

Moody’s Investors Service said it assigned a Ba3 rating to PTC Inc.’s proposed $750 million of senior unsecured notes. Proceeds will be used for the near-term repayment of the company’s senior unsecured notes due 2024 and the partial repayment of outstanding revolver borrowings in an essentially leverage neutral transaction.

The agency also affirmed PTC’s Ba2 rating and Ba2-PD probability of default rating. Concurrently, Moody’s affirmed the Ba3 ratings on the company’s $500 million senior unsecured notes.

The outlook is negative.

S&P assigns PTC notes BB-

S&P said it assigned its BB- rating to PTC Inc.’s proposed $750 million of senior unsecured notes due 2025 and 2028. PTC will use the proceeds to fully refinance its existing $500 million of notes due 2024 and use the remaining proceeds to repay a portion of the $628 million outstanding under its $1 billion revolving credit facility (unrated). S&P affirmed the company’s BB rating. The outlook is stable.

“The rating affirmation largely reflects our expectation that the refinancing will not significantly impact PTC's outstanding debt balance and, thus, its credit metrics. However, the refinancing would result in a delay in the company's rate of gross debt reduction. This is because about $250 million of the current RCF utilization will be converted to notes that are considered permanent debt and cannot be readily prepaid,” said S&P in a press release.

Fitch rates Sprint notes BB

Fitch Ratings said it assigned a BB/RR2 rating to Sprint Corp.'s proposed $1 billion junior guaranteed notes offering and maintained the rating watch positive on Sprint and Sprint Communications Inc.'s B+ long-term issuer default ratings and outstanding debt including debt issued at Sprint Capital Corp.

The notes are being issued under an indenture, dated Sept. 11, 2013, with covenants that are similar to the other Sprint senior notes. The notes will be guaranteed on a senior unsecured basis by Sprint Communications, Inc. Sprint intends to use the proceeds to refinance debt. The notes have a special mandatory redemption upon the consummation of the T-Mobile US, Inc. transaction.

Fitch said it believes the potential merger between Sprint Corp. and T-Mobile, if completed, will substantially strengthen the credit support for existing Sprint bondholders with the transaction as proposed, and can likely lead to a three-notch upgrade of the IDRs and depending on the debt issuance, up to three-notches on the outstanding debt of Sprint and its subsidiaries.

S&P assigns Station loans BB-

S&P said it assigned its BB- issue-level rating and 2 recovery rating to Station Casinos LLC’s proposed senior secured revolver, term loan A-5 and term loan B-1. The 2 recovery rating indicates the expectation for substantial (70%-90%; rounded estimate: 80%) recovery for lenders in the event of a payment default.

The company intends to use the proceeds, along with the proceeds from its recently issued $750 million senior unsecured notes, to fully repay its revolver borrowings ($457 million outstanding as of Sept. 30) and term loan B ($1.8 billion outstanding as of Sept. 30) and fully or partially repay its term loan A balance ($245 million outstanding as of Sept. 30). S&P plans to withdraw its ratings on the company’s revolver and term loan B once they are repaid.

“Because this is essentially a debt-for-debt transaction, it does not affect our forecast credit measures or B+ issuer credit rating. We continue to expect the company’s adjusted leverage to improve to the high-4x area in 2020, from the high-5x area as of the end of 2019, due to the investments it made in its Palms and Palace Station properties in 2019,” said S&P in a press release.

S&P revises Buckeye recovery rating to 3

S&P said it revised its recovery rating on Buckeye Partners LP's senior unsecured notes to 3 from 4 following IFM Global Infrastructure Fund's contribution of its 57.6% equity interest in Freeport LNG Train 2 into Buckeye Partners. The 3 recovery rating indicates an expectation for meaningful (50%-70%; rounded estimate: 55%) recovery of principal for creditors in the event of payment default. The BB issue-level rating on the senior unsecured notes remain unchanged as does the BB issuer credit rating.

Moody's raises D.R. Horton

Moody's Investors Service said it upgraded D.R. Horton, Inc.'s senior unsecured note ratings to Baa2 from Baa3. The outlook is stable.

The ratings upgrade reflects the strength of Horton's credit profile and its operating strategy, track record of solid execution and Moody's belief the company will be able to maintain a strong balance sheet during both the favorable market conditions and industry weakness, the agency said.

Recent improvements in the business profile include a trend toward a higher proportion of optioned land (now representing 61% of total land position), a reduction in the company's debt to capitalization to low 20%, a buildup of a strong asset base (including 50% of inventory consisting of homes, which provides nearly a 2x coverage of debt) and an excellent liquidity position of $2.5 billion including cash and revolver availability.

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