Moody’s cuts Ceridian, ups facility

Moody’s Investors Service said it downgraded Ceridian HCM Holding Inc.’s corporate family rating to B3 from B2 and its probability of default rating to B3-PD from B2-PD. Concurrently, Moody’s upgraded Ceridian’s senior secured first-lien credit facility to B1 from B2. The speculative grade liquidity rating (“SGL”) remains SGL-2.

In explaining its actions, Moody’s cited Ceridian’s planned $500 million in senior unsecured convertible notes due 2026 with proceeds that will be partially used for the permanent financing of the company’s acquisition of Ascender HCM Pty Ltd.

“Based on Moody’s expectation of a relatively modest initial EBITDA contribution from the Ascender purchase, this transaction, despite its strategic benefits, will result in a considerable increase in Ceridian’s gross debt leverage, weakening its overall credit quality. While the convertible issuance has negative implications for the company’s overall credit profile, the considerable incremental first loss support provided to Ceridian’s secured debt prompted the upgrade of the ratings for these instruments,” the agency said in a press release.

The outlook is stable.

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