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Moody's cuts TMX to negative
Moody's Investors Service said it changed the outlook on TMX Finance LLC's corporate family and senior secured debt ratings to negative from stable.
The agency also said it affirmed its corporate family and existing $250 million senior secured notes ratings at B2 and assigned the rating of B2 to the planned $60 million senior secured notes add-on.
The change in outlook reflects the increased execution risk associated with TMX's accelerated store openings, Moody's said, and an increase in the company's near term financial leverage to finance store growth.
As TMX demonstrates profitability consistent with the company's projections and as leverage decreases through earnings retention once new stores start ramping up, the outlook could return to stable, the agency said.
The ratings reflect TMX's monoline nature, exposure to the deep subprime consumer segment and relatively modest size, Moody's said.
The company's limited geographic diversification exposes it to potential state-specific regulation or economic issues, the agency added.
Moody's also noted TMX's long history of operations in the fragmented subprime lending space, solid secular demand fundamentals and experienced management team.
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