Moody's upgrades CEB

Moody's Investors Service said it upgraded CEB Inc.'s corporate family rating to Ba2 from Ba3, probability of default rating to Ba3-PD from B1-PD and $200 million senior secured revolver due 2018 and $525 million senior secured term loan A due 2018 to Ba2 (LGD3) from Ba3 (LGD3). The SGL-1 speculative grade liquidity rating was affirmed. The outlook is stable.

The agency said the upgrade reflects CEB's strong operating performance and Moody's expectation that the company will maintain moderate financial leverage near 2 times on a reported total debt to adjusted EBITDA basis or 4.3 times on a Moody's lease-adjusted basis.

The Ba2 rating is supported by CEB's high proportion of recurring, subscription-based revenues, its good EBITDA margins and low capital expenditures that result in high EBITDA to free cash flow conversion, Moody’s said.

At the same time, the agency said the rating is constrained by CEB's moderate operating scale relative to Ba2-rated services companies and the cyclical nature of its earnings, which are vulnerable to declining or weak enterprise spending.

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