Moody’s: Sterling unaffected on loan add-on

Moody's Investors Service said that Sterling Midco Holdings, Inc.'s (doing business as Sterling Talent Solutions) proposed $10 million upsizing to $60 million from the recently announced $50 million add-on to its $440 million first-lien term loan due 2022 ($437.2 million outstanding as of March 31) is a moderate credit negative, but it does not impact the company's B2 corporate family rating or negative outlook.

The agency said it views the add-on transaction including the $10 million upsizing as a moderate credit negative because it indicates Sterling's willingness to aggressively add fixed-term debt that will slow its de-leveraging progress in favor of acquisitions and one-time spending.

Terming out the revolver and adding cash to the balance sheet enhances the company's liquidity near-term, but Sterling will likely continue to use revolver draws and cash for acquisitions and integration spending, Moody’s added.

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