Moody’s confirms Chindata ratings

Moody's Investors Service said it ended its review for downgrade started on Aug. 15 and confirmed Chindata Group Holdings Ltd.’s Ba2 corporate family rating with a negative outlook.

"The rating confirmation reflects Chindata's sufficient funding sources for its planned privatization, supported by cash contribution from its sponsor Bain Capital, and solid revenue and earnings growth prospects underpinned by its long-term hyperscale contracts with large tenants. We therefore expect the company to be able to gradually reduce its financial leverage post-privatization," said Shawn Xiong, a Moody's vice president and senior analyst, in a press release.

"The negative outlook reflects our expectation that the company's leverage and its debt burden will rise meaningfully, as well as reduced transparency as a result of the partially debt-funded privatization," Xiong added.

Chindata is expected to borrow around $1.24 billion from the term loan facilities and use around $740 million to buy the company's remaining common stock held by non-rollover shareholders and $500 million to fully repay its senior secured loan, the agency said.

Moody’s said it estimates Chindata's net debt leverage, as measured by Moody's-adjusted net debt-to-EBITDA, to increase to 5.1x-5.5x on a pro forma basis for 2023 before slowly deleveraging mostly driven by earnings growth as the company continues to grow its data center portfolio. Chindata's leverage is expected to improve steadily towards 4x-4.5x over the next 12-18 months.

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