Moody’s assigns B2 to Sterling facility

Moody's Investors Service said it assigned a B2 rating to Sterling Midco Holdings Inc.'s proposed amended and extended first-lien credit facility, consisting of an upsized $647 million first-lien term loan due 2024 (including a $155 million incremental term loan) and an $85 million revolving credit facility due 2022.

Concurrently, the agency affirmed the company's B2 corporate family rating and B2-PD probability of default rating, and changed the outlook to stable from negative.

Moody’s said the stable outlook and affirmed corporate family rating consider Sterling's consistent organic topline growth and lower integration risk following significant progress on the TalentWise transaction since acquiring the business in early 2016.

Sterling has made progress reducing leverage and the agency expects debt-to-EBITDA and free cash flow to strengthen further over the next 12 to 18 months, primarily from realizing remaining cost synergies while maintaining good performance across its core offerings and capitalizing on new customer wins.

The stable outlook also anticipates that Sterling will successfully execute gradual migration of its customers onto the new platform with limited service disruptions, Moody’s added.

The rating assignments follow Sterling's announcement that it will upsize its first-lien term loan by $155 million and extend the maturity of its term loan to 2024 from 2022.

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