Moody's assigns StoneCo, notes Ba2

Moody's Investors Service said it assigned a first-time Ba2 corporate family rating to StoneCo Ltd. At the same time, Moody's assigned a Ba2 rating to the proposed backed senior unsecured notes to be issued by StoneCo and guaranteed by Stone Pagamentos SA.

“Stone’s Ba2 rating reflects its position as the largest independent card processor in Brazil with a competitive business model offering a high level of service and broad solutions specially for small and mid-size businesses. Moody's believes the company's strategy presents a value proposition that balances growth, profitability and relative stability of client base. Moody's expects the transaction volume growth to remain robust, allowing for additional cost dilution, operating flexibility and healthy operating margins,” the agency said in a press release.

However, Stone's small scale compared to peers and short track record in an industry that evolves rapidly with strong disruption potential constrain the rating, Moody’s said.

Offering proceeds will be used for general corporate purposes, which may include an investment in Banco Inter, growth of the business and refinancing of certain corporate indebtedness.

The outlook is stable.

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