Moody's cuts Alorica

Moody's Investors Service said it downgraded Alorica Inc.'s corporate family rating to Caa2 from Caa1, probability of default to Caa2-PD from Caa1-PD and its senior secured facility to Caa2 from Caa1. The ratings have also been placed under review for further downgrade.

Moody's said its decision to downgrade the CFR to Caa2 and place Alorica's ratings under review reflects incremental concern regarding the company's ability to secure another extension for the upcoming $100 million principal payment under the term loan A due Friday, as well as the risk it could face difficulty in refinancing its current capital structure on time and under economical terms. Delays in completing a comprehensive refinancing transaction could materially strain already weak liquidity and increase the probability of default.

S&P cuts BMC Acquisition

S&P said it downgraded the ratings for BMC Acquisition Inc. and its first-lien credit facility to B- from B. Cash flow generation and liquidity at BMC has been below S&P’s expectations, and the company had less than $10 million of available liquidity at Sept. 30.

“The downgrade reflects the company's weak liquidity position and our expectation for heightened liquidity stress absent a corporate action that improves the company's liquidity profile,” said S&P in a press release.

The outlook is stable.

Moody's downgrades GIP III Stetson I

Moody's Investors Service said it downgraded GIP III Stetson I, LP's corporate family rating to B1 from Ba3, probability of default rating to B1-PD from Ba3-PD and the senior secured term loan rating to B1 from Ba3. The term loan borrowers are GIP III Stetson I and GIP III Stetson II, L.P. The borrowers are jointly and severally liable with respect to the term loan. The rating outlook is stable.

The agency also affirmed EnLink Midstream, LLC's Ba1 corporate family rating Ba1-PD probability of default rating and Ba1 senior unsecured notes rating. Enlink’s speculative grade liquidity rating was upgraded to SGL-2 from SGL-3. The outlook is stable.

Moody's also affirmed Enlink's subsidiary, EnLink Midstream Partners, LP's Ba1 senior unsecured notes rating and Ba3 perpetual preferred units rating. The outlook is stable.

“GIP III Stetson's downgrade reflects its high stand-alone leverage and reduced cash flow pro forma for EnLink's distribution cut,” said Amol Joshi, a Moody's vice president and senior credit officer, in a press release.

S&P cuts Guitar Center

S&P said it downgraded Guitar Center Holdings Inc. and its senior secured notes to CCC. The agency lowered the rating on the senior unsecured notes to CC.

“The downgrade reflects our view that while performance at Guitar Center has improved, the capital structure remains unsustainable relative to cash flow levels and the approaching large debt maturities. As a result, we believe the likelihood of a distressed restructuring occurring in the next 12 months has increased,” said S&P in a press release.

The outlook is negative.

Fitch trims Sophos loan to B-

Fitch Ratings said it changed the rating on Surf Intermediate I Ltd.’s (Sophos) first-lien secured facilities to B-/RR4/49% from an expected B/RR3/53% following the upsizing of the company's term loan B by $100 million to $1.53 billion. The company also downsized its second-lien loan by the same amount so that the total amount of debt remains unaffected.

The change in the debt composition, as well as lower-than-initially expected coupons, will have a moderately positive impact on cash flows and leverage due to lower interest expenses, but the leverage profile is expected to remain consistent with an issuer default rating of B-, which was Sophos’ expected rating, the agency said.

Fitch said it believes the private equity ownership of Sophos could limit deleveraging as its equity owners seek to optimize return on equity (ROE). Fitch forecasts gross leverage to remain over 7x and funds from operations (FFO) adjusted gross leverage to decline to below 7x by financial year to March 2023 through organic growth and cost efficiency improvements. Sophos' operating and leverage profiles are consistent with the B- IDR,” said Fitch in a press release.

S&P trims U.S. TelePacific

S&P said it downgraded U.S. TelePacific Holdings Corp. to B- from B and removed all the ratings from CreditWatch, where they were placed with negative implications on July 25.

“The downgrade reflects our view that TelePacific could be challenged to refinance its debt maturities over the next couple of years. TelePacific's $25 million senior secured revolving credit facility comes due in May 2022 and the $573 million outstanding (on a pro forma basis) on its term loan B matures in May 2023. Given the secular challenges facing the U.S. wireline industry and limited access to capital markets, we believe that TelePacific could be challenged to refinance these obligations when they come due,” said S&P in a press release.

The outlook is stable.

S&P ups Fusion, rates loans B, CCC+

S&P said it upgraded Fusion Connect Inc. to CCC+ from D after emerging from bankruptcy. The agency assigned a B issue-level rating and 1 recovery rating to the company's $115 million super senior secured term loan due 2024 and a CCC+ rating with a 3 recovery rating to its $225 million senior secured first-lien term loan due 2025.

“The ratings on Fusion reflect its reduced debt burden, improved funds from operations (FFO) and liquidity, but uncertain longer-term business prospects. Fusion's reorganization includes the elimination of about $320 million of funded debt relative to its prebankruptcy levels but involved no substantive changes to the company's business. Pro forma for the new capital structure, we expect the company's adjusted debt to EBITDA to be about 4x in 2020, compared with about 6x prebankruptcy,” said S&P in a press release.

The outlook is stable.

S&P revises CEVA Logistics view to negative

S&P said it revised the outlook on CEVA Logistics AG to negative from stable, following the same action on CMA CGM, and affirming our 'B+' long-term issuer credit and issue ratings on the company and its secured debt.

“We think container shipping and logistics industry conditions could remain difficult over the next 12 months, potentially constraining the group's cash generation and financial flexibility to meet near-term liquidity needs at a time when it also faces significant bullet debt maturities,” said S&P in a press release.

The negative outlook reflects the one-in-three possibility that the group's liquidity could become increasingly constrained resulting in a downgrade within the next six months.

S&P puts Del Monte Foods on watch

S&P said it placed all its Del Monte Foods Inc.’s ratings on CreditWatch with negative implications to reflect the increased uncertainty around the company’s ability to refinance its capital structure due to the length of time that has passed since its parent’s announcement. The CreditWatch also reflects that the majority of the company’s capital structure will soon become current.

“We plan to resolve the CreditWatch when we receive further details about the timing of DMFI’s refinancing. Upon the resolution of the CreditWatch listing, which could occur in the coming days, we may lower or affirm our ratings on the company. Specifically, we could downgrade DMFI if its first-lien term loan becomes current on Feb.18 and we believe that it will not be able to refinance on a timely basis with reasonable terms,” said S&P in a press release.

S&P changes Sabre view to positive

S&P said it revised the outlook on Sabre Industries Inc. to reflect the updated forecast for adjusted leverage to drop below 4x debt to EBITDA over the next 12 months.

“The positive outlook reflects the potential for a one-notch upgrade over the next 12 months. The outlook is supported by steady improvement in sales, margins, and credit ratios in recent years – such that we now expect revenue to begin to approach $1 billion and leverage to drop below 4x debt to EBITDA,” said S&P in a press release.

S&P also affirmed the B ratings on Sabre and its senior secured term loan.

Moody's changes Elior view to stable

Moody's Investors Service said it affirmed the Ba2 corporate family rating and Ba2-PD probability of default rating of Elior Group SA and changed the outlook to stable from negative.

“We revised Elior's rating outlook to stable from negative to reflect the improvement in the company's credit metrics following the disposal of Areas as well as our expectation that the stabilization of operating performance in the last fiscal year ended September 2019 will be sustained over the next 12-18 months,” said Eric Kang, a Moody's vice president, senior analyst and lead analyst for Elior, in a press release.

“Competitive pressure will continue to constrain any material improvement in organic revenue growth and operating margins, but we expect Elior's Moody's-adjusted debt/EBITDA to stay around 3.5x-3.6x and Moody's-adjusted free cash flow/debt to be around 2%-2.5%, which will adequately position Elior's CFR at Ba2,” said Kang.

S&P rates American Express Global facility B+

S&P said it assigned a B+ rating to GBT III BV’s (American Express Global Business Travel) proposed $1.37 billion senior secured first-lien credit facility and will withdraw the rating on the existing $250 million term loan B. The recovery rating on the proposed debt is 3 (60% rounded recovery).

The group plans to issue $1.220 billion of new term loans, with a $615 million initial term loan being drawn to repay its existing debt and pay a dividend of $480 million. It will then use a delayed draw facility to fund acquisitions or pay additional dividends. The company's discretionary cash flow to debt is likely to remain below 5% over the next two years.

S&P also lowered the company’s rating to B+ from BB and assigned a B+ issuer credit rating to GBT JerseyCo Ltd.

The outlook is stable.

Fitch rates AT&T preferreds BBB

Fitch Ratings said it assigned BBB ratings to AT&T Inc.'s offerings of euro perpetual preferred stock and dollar-denominated perpetual preferred stock; both have been assigned 50% equity credit. AT&T's long-term issuer default rating is A-. The outlook is stable.

The company intends to use the proceeds for general corporate purposes.

Moody’s assigns AT&T preferreds Ba1

Moody’s Investors Service said it assigned a Ba1 rating to AT&T Inc.’s proposed series C perpetual preferred stock. AT&T intends to use the proceeds for general corporate purposes, which Moody’s believes may include the repurchase of its common stock under its ongoing share repurchase program.

The Ba1 rating on AT&T’s preferred stock reflects the preferred stock’s subordinated, and junior in right of payment position, to AT&T’s long-term debt. It is also subordinated to any future subordinated debt issuance. “The two-notch differential between the Ba1 assigned to the series C preferred stock and AT&T’s Baa2 unsecured rating is consistent with our methodology guidance for notching corporate instrument ratings based on differences in security and priority of claim,” said Moody’s in a press release.

S&P rates AutoScout24 loans B-, CCC

S&P said it assigned a preliminary B- issue rating and preliminary 3 recovery rating to AutoScout24’s proposed first-lien facilities and a preliminary CCC issue rating and preliminary 6 recovery rating to the company's proposed second-lien term loan.

Hellman & Friedman will acquire 100% of AutoScout24 with a business valuation of €2.9 billion.

The firm will fund the acquisition with €1.8 billion in equity instruments (a part will be shareholder loans) and €1.1 billion of new debt. S&P also assigned a preliminary B- long-term issuer credit rating to AutoScout24's parent company, Speedster Bidco GmbH.

The outlook is positive, which reflects a one-in-three possibility of an upgrade if AutoScout24's growth of operations turns into rapid EBITDA growth and if the company proactively repaid some debt and reduced its S&P Global Ratings-adjusted leverage to 7x or below in the next 18 months while generating positive and growing free operating cash flows.

Fitch assigns Cinemark loans BB+, notes BB-

Fitch Ratings said it assigned a BB+/RR1 to the Cinemark USA Inc.’s secured revolver and secured term loan and a BB-/RR4 to its senior unsecured notes. Fitch also assigned the company’s parent Cinemark Holdings, Inc. a BB- issuer default rating. The outlook is stable.

The ratings mirror the company's scale and market position as the third-largest U.S. theatrical exhibitor and its leading presence in Latin American territories, the company's relatively conservative financial profile with total leverage, as a measure as total debt with equity credit to operating EBITDA of 2.5x (4.4x including lease equivalent debt), and improving free cash flow profile.

The ratings also incorporate a degree of operating volatility given Cinemark's reliance on film studio content and the high fixed cost structure of the business. Fitch said it expects credit metrics could be stronger during periods of good box office performance to provide some cushion during poor-performing box office cycles.

S&P rates Circor loan B

S&P said it assigned its B issue-level rating and 3 recovery rating to Circor International Inc.’s proposed $492 million term loan, which will replace and reprice its existing first-lien term loan. The 3 recovery rating indicates the expectation for meaningful recovery (50%-70%; rounded estimate: 60%) in the event of a payment default.

“We revised our rounded recovery estimate for the company’s first-lien credit facilities to 60% from 55% because the company paid down the first-lien term loan with the proceeds from the sale of its instrumentation and sampling business,” said S&P in a press release.

S&P’s B issuer credit rating and stable outlook on Circor are unchanged.

S&P assigns IXS, loan B

S&P said it assigned B ratings to IXS Holdings, Inc. and its proposed $620 million first-lien term loan. The agency also assigned a 3 recovery rating to the loan. IXS will also obtain a $75 million asset-based credit facility.

The loans along with common equity will be used by Clearlake Capital Group, LP to acquire IXS.

“We believe IXS' financial policies will continue to remain aggressive with its new ownership by financial sponsor Clearlake. Although IXS has used cash on hand to repay outstanding debt, based on our assessment of Clearlake's financial policies, we view significant debt reduction as unlikely, given the potential for future debt-financed acquisitions or dividend recapitalizations,” said S&P in a press release.

The outlook is stable.

S&P rates KBR facility BB-

S&P said it assigned its BB- issue-level rating and 3 recovery rating to KBR Inc.'s new first-lien credit facility, which will comprise a $500 million revolver, a $500 million performance letter of credit facility, a $165 million term loan A-2 due 2025 and a $520 million term loan B due 2027. The 3 recovery rating indicates an expectation for meaningful (50%-70%; rounded estimate: 60%) recovery.

At the same time, S&P assigned a BB+ issue-level rating and a 1 recovery rating to the $110 million term loan A-1 due 2025 held at KBR's Australian subsidiary Kellogg Brown & Root Pty Ltd. The 1 recovery rating indicates the expectation for very high (90%-100%; rounded estimate: 95%) recovery.

The company plans to use the proceeds to refinance and pay down its credit facility. “Although the transaction will reduce KBR's balance sheet debt and interest expense, we do not believe it will materially affect our expected credit ratios,” S& P said in a press release. The issuer credit rating on KBR is unchanged

Moody's: American Express Global, loans B2

Moody's Investors Service said it assigned a first time B2 corporate family rating and B2-PD probability of default rating to GBT UK TopCo Ltd. (American Express Global Business Travel) in connection with the company's recapitalization transaction. Moody's also assigned a B2 rating to the company's proposed $1.37 billion first-lien senior secured credit facility, consisting of a $615 million initial first-lien term loan, a $605 million delayed draw first-lien term loan, and a $150 million revolving credit facility. The outlook is stable.

GBT UK TopCo is the indirect holding company of the two borrowers under the new credit facility, GBT US III Inc. and GBT III BV, and is the guarantor (along with certain of the company's domestic and foreign subsidiaries) of the new credit facility. The two borrowers will provide cross guarantees of the other borrower's obligations.

Proceeds will be used to fund a dividend of about $484 million to its owners, refinance debt, acquire corporate travel assets and pay transaction fees and expenses. Following the transaction, GBT will continue to be 50% owned by American Express and 50% by a consortium of institutional investors. GBT was carved-out of American Express in 2014 and completed its operational separation from the parent company in 2019. There is no credit support provided to GBT's new credit facility from American Express.

Moody's cuts Under Armour

Moody's Investors Service said it downgraded Under Armour, Inc.'s senior unsecured rating to Ba1 from Baa3. Moody's also assigned a Ba1 corporate family rating, Ba1-PD probability of default rating and a speculative grade liquidity rating of SGL-1. The long-term ratings were placed on review for downgrade.

“The downgrade and review reflect Under Armour's ongoing challenges reinvigorating growth in its core North American market,” said Mike Zuccaro, a Moody's vice president, in a press release. “While Under Armour has taken significant action over the past two years to improve its overall profit margins, balance sheet and cash flow, accelerated sales declines in 2020 will lead to further de-leveraging of costs, and when coupled with the need to continue investing in growth and marketing, the company's profitability and credit metrics will materially deteriorate in 2020.”

Under Armour is assessing a potential 2020 restructuring plan that could include about $325 million to $425 million of pre-tax restructuring-related charges. If adopted, the plan could drive about $30 million to $50 million in pre-tax benefits in 2020.

The review will focus on the scope of the potential 2020 restructuring plan, and its effect on the company in terms of expected savings, timing and cost to achieve the savings, including any effect on cash and cash flow.

S&P revises Tapestry view to stable

S&P said it revised the outlook for Tapestry Inc. to stable from positive citing difficulties at integrating Kate Spade & Co. and the increased risk associated with acquiring new brands.

“The stable outlook reflects our expectation for generally consistent operating results at Coach and gradual performance improvement at Kate Spade despite current macroeconomic hurdles. We expect credit metrics to remain solid with FFO to debt around the low-40% area and discretionary cash flow (DCF) to debt in the high-single-digit percentage area over the next two years. We also expect the company to focus its capital allocation policy on driving organic growth,” S&P said in a press release.

S&P also affirmed all its ratings on Tapestry.

Fitch rates DTE Electric bonds A+

Fitch Ratings said it assigned an A+ rating to DTE Electric Co.'s $1.1 billion series 2020A general and refunding mortgage bonds due 2030 and series 2020B general and refunding mortgage bonds due 2050. The mortgage bonds will rank pari passu with the company’s secured mortgage debt.

Proceeds will be used to pay senior notes due 2020, short-term debt and capital expenditures. The outlook is stable.

DTE's rating reflects Fitch's expectations of stable earnings and cash flows from the low-risk regulated electric utility, a constructive regulatory environment in Michigan and a solid financial profile.

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