Moody’s assigns Ba2 to Carter’s notes

Moody’s Investors Service said it assigned a Ba2 to the William Carter Co.’s (Carter’s) proposed $400 million senior unsecured notes due 2025.

Proceeds will be used to repay about $200 million of the borrowings under the company’s $750 million revolving credit facility and for general corporate purposes.

Concurrently, Moody’s affirmed the company’s Ba1 corporate family rating, the Ba1-PD probability of default rating and the Ba2 rating on the $500 million senior unsecured notes due 2027. The speculative-grade liquidity rating was downgraded to SGL-2 from SGL-1. The outlook remains stable.

“The affirmation of the CFR, PDR and unsecured notes rating with a stable outlook reflects Moody’s expectations that Carter’s credit metrics and liquidity will recover to levels supportive of the Ba1 rating over the next 24 months,” the agency said in a press release.

The speculative-grade liquidity rating downgrade reflects Moody’s expectations for weak free cash flow generation and heavy revolver reliance during 2020. Still, plentiful cash balances will adequately support operations, the agency said.

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