Moody's lowers NEP/NCP loan rating

Moody's Investors Service said it affirmed the B2 corporate family rating of NEP/NCP Holdco, Inc. after news of the company's incremental $125 million debt-raise through an upsize of the first-lien term loan.

The upsizing will be used to fund acquisitions and term-out borrowings under its revolving credit facility, the agency explained.

Moody's said it downgraded NEP/NCP Holdco's first-lien term loan and revolver ratings and NEP Europe Finco BV's first-lien term loan rating to B2 from B1.

The probability of default rating is affirmed at B2-PD and the second-lien rating is affirmed at Caa1.

The outlook remains negative.

The ratings reflect the company's acquisitive debt-funded growth strategy as high capital expenditure needs continue to drive negative free cash-flow generation, Moody's said.

Though NEP has demonstrated its ability to grow organically or with selected equipment and contract purchases, Moody's said it views continued borrowings to fund depreciating equipment to be a risky strategy despite contractual agreements of varying lengths.

But, NEP's long-standing leading position within its niche business facilitates good client relationships, as well as access to potential acquisitions, Moody's said.

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