Moody’s downgrades K&N Parent

Moody’s Investors Service said it downgraded K&N Parent, Inc.’s corporate family rating to Caa3 from B3, Probability of Default Rating to Caa3-PD from B3-PD, senior secured first-lien credit facilities to Caa2 from B2 and second lien term loan to Ca from Caa2. The outlook remains negative.

The downgrade reflects Moody’s view K&N’s leverage profile will remain elevated and its liquidity position weak as cash flow and earnings generation will be pressured during economic conditions in 2020, especially given the discretionary nature of its products, the agency said.

“As a result, Moody’s views default risk to be heightened, including the potential for a distressed exchange as the current debt capital structure appears unsustainable,” Moody’s said in a press release.

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