Moody’s upgrades McAfee

Moody’s Investors Service said it upgraded McAfee, LLC’s corporate family rating to B1 from B2; first-lien debt rating to B1 from B2 and probability of default rating to B1-PD from B2-PD. The transition to a publicly-traded company and payoff of the second-lien debt with proceeds from the IPO drove the upgrade.

Moody’s revised the outlook to stable from under review. This action concludes the review started on Oct. 15 when McAfee launched its IPO process.

“As a result of the debt paydown, leverage decreased to approximately 5x from just under 6x and pro forma free cash flow to debt increased to 6% from 4%. Moody’s also expects the introduction of public shareholders (albeit limited to around 10% initially) and independent Board members will drive a more conservative approach to leverage and shareholder distributions than under full private ownership,” Moody’s said in a press release.

The outlook reflects the expectation of low to mid-single-digit revenue growth and leverage trending towards 4.5x over the next 12-18 months in the absence of debt-funded acquisitions, the agency said.

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