Moody’s gives B2 to NorthStar loan

Moody’s Investors Service said it gave a B2 rating to NorthStar Group Services, Inc.'s planned $710 million backed senior secured first-lien term loan due 2028. The company also plans to secure a $125 million asset-based lending facility to replace its outstanding revolver.

All other ratings for NorthStar, including the B2-PD probability of default rating and B2 rating on its outstanding backed senior secured first-lien term loans maturing in 2026 are unchanged.

NorthStar plans to use the proceeds primarily to repay about $683 million outstanding on the company's term loans due 2026 and about $11 million drawn on its $100 million ABL expiring in 2025, as well as pay transaction fees and expenses. The company plans to draw $5 million on the new revolver at the close.

“The transaction will increase financial leverage, with Moody's expectation of pro forma adjusted debt-to-LTM EBITDA of about 4.3x at Sept. 30, 2023. However, the company is also extending debt maturities and expects to reduce annual debt amortization requirements to 1% compared to the current level of 2.5% on the existing term debt, which would step up to 5% in 2024,” the agency said in a press release.

The outlook is stable.

S&P cuts CWT Travel Group

S&P said it downgraded its ratings for CWT Travel Group to SD, selective default, from CCC+ and its $625 million of senior secured notes to D from CCC+.

“The downgrade follows CWT Travel Group's exchange of its $625 million senior secured notes for equity, which we view as tantamount to a default. On Nov. 9, 2023, CWT Travel Group announced it had completed its debt recapitalization, which involved exchanging its $625 million senior secured notes for common stock. In our view, this represents a selective default because the noteholders received less than they were originally promised. The company also raised additional capital to fund its liquidity needs,” S&P said in a press release.

S&P said it plans to upgrade CWT Travel’s ratings once it has reviewed debt structure and maturity profile.

Moody’s downgrades JetBlue Airways

Moody's Investors Service said it downgraded JetBlue Airways Corp.’s ratings, including the corporate family rating to B1 from Ba2 and the probability of default rating to B1-PD from Ba2-PD. The agency also downgraded the company's senior secured revolving credit facility to Ba2 from Baa3.

Each of the company's enhanced equipment trust certificate ratings were downgraded by one notch as follows: pass-through certificates series 2019-1 class AA to A3 from A2, pass-through certificates series 2020 class A to A3 from A2, pass-through certificates series 2019-1 class A to Baa3 from Baa2, pass-through certificates series 2020 class B to Baa3 from Baa2 and pass-through certificates. series 2019-1B to Ba1 from Baa3.

Moody’s placed the ratings on review for further downgrade. Previously, the outlook was stable. Moody's downgraded the speculative grade liquidity rating to SGL-3 from SGL-1.

“The downgrade of the corporate family rating reflects the sharp decline in Moody's expectations for the company's financial results for 2023 and 2024. Moody's had expected earnings and operating cash flow to strengthen in the second half of 2023, leading to improving credit metrics and a solid foundation heading into 2024.

“However, the imbalance of capacity and demand in the U.S. domestic market in the third quarter pushed down JetBlue's average fare to $201.73 from $229.95 in the prior-year quarter. Operating cash flow for the third quarter missed Moody's projection by $300 million. Passenger revenue trailed Moody's projection by $200 million and that in the 2022 3rd quarter by $314 million,” the agency said in a statement.

The review reflects a further downgrade if JetBlue goes ahead with its planned acquisition of Spirit Airlines, Inc. Moody’s said.

S&P trims Team Health

S&P said it lowered its ratings on Team Health Holdings Inc. and its remaining first-lien term loan due 2027 to CCC from CCC+ and lowered the rating on the unsecured notes to CC from CCC-. The recovery rating on the term loan was revised to 4 from 3 and the recovery rating on the unsecured debt remains 6.

S&P noted the company's refinancing of its term loan creates a12 month runway until its springing maturity next November. The company issued $750 million of 13½% first-lien notes due 2028 and a new $510 million accounts receivable facility. Team Health will use the funds to refinance its remaining $1.16 billion senior secured term loan due in February. It also announced that it extended its revolving credit facility until March 31, 2028.

“We expect the company will generate negative cash flow in 2023 and 2024, likely no better than breakeven in 2025. The combination of rising rates and declining profitability led to a significant deterioration in cash flow generation in 2023. We expect adjusted free operating cash flow will remain substantially negative, at roughly negative 3% to negative 5% of adjusted debt,” S&P said in a press release.

Team Health’s term loan is trading in the low 70 cent range and its 2025 bonds are trading around 80 cents with a yield in the high 20% area.

“We believe this elevates the risk of a distressed exchange or below-par repurchase which results in the lenders receiving less than the original promise, which we would view to be akin to default,” the agency said.

The outlook is negative.

S&P lifts Insulet

S&P said it raised its ratings for Insulet Corp. to B+ from B and its $500 million senior secured term loan B due 2028 and $300 million revolving credit facility to BB- from B+.

“Strong growth and margin expansion support deleveraging and improved cash generation. Insulet's revenue grew 27% in the first nine months of 2023 compared with the same period in 2022, driven by continuous expansion of its global customer base and the fast adoption of its new generation product–Omnipod 5–which is designed to provide enhanced connectivity and automation features such as integration with continuous glucose monitoring devices and insulin management from a smartphone device,” S&P said in a press release.

The agency said it forecasts revenue growth of 26%-27% in 2023 and 15%-20% in 2024 and to reach S&P Global Ratings-adjusted free operating cash flow to debt of 4%-5% by the end of 2023 and more than 5% in 2024 while keeping leverage below 5x.

The outlook is stable.

S&P revises Gemini HDPE view to negative

S&P said it revised the outlook for Gemini HDPE LLC to negative from stable and affirmed its BB rating.

The outlook reflects the negative outlook of the parent of its revenue counterparty Ineos Gemini HDPE Holding Co. LLC (Ineos HoldCo), the agency said.

Moody's reviews FirstEnergy for upgrade

Moody's Investors Service said it placed FirstEnergy Corp.'s ratings under review for upgrade, including its Ba1 corporate family rating, Ba1-PD probability of default rating and Ba1 senior unsecured ratings. FirstEnergy's SGL-1 speculative grade liquidity rating is unchanged. Previously, the outlook was positive.

"The review for upgrade will assess FirstEnergy's ability to improve its financial metrics including maintaining a cash flow from operations before changes in working capital (CFO pre-WC) to debt ratio above 11% on a sustained basis," said Jairo Chung, a Moody's vice president and senior credit officer, in a press release.

The agency noted FirstEnergy expects to get most of the proceeds from the sale of an equity interest in subsidiary FirstEnergy Transmission in early 2024 and the rest before year-end 2024. The company plans to use the proceeds to strengthen its balance sheet by repaying some parent debt and avoiding additional debt issuance.

S&P alters Stoneridge outlook to stable

S&P said it revised its outlook for Stoneridge Inc. to stable from negative and affirmed its B issuer rating. S&P does not rate Stoneridge’s bank loans.

“We revised our outlook on Stoneridge to stable following its revolver refinancing, which alleviated near-term liquidity pressures and modestly extended the debt maturity profile. The company completed a refinancing of its previous revolving credit facility due June 2024 with a new $275 million cash flow revolver due November 2026. The maturity extension of Stoneridge's revolving credit facility enhanced our assessment of the company's liquidity, despite revolver availability being constrained by the 3.x leverage covenant (3.11x actual at end of the third quarter) on a trailing basis,” S&P said in a press release.

The agency said it expects Stoneridge to deliver improved profitability over the next few years with free operating cash flow approaching breakeven and greater availability on its revolver.

Moody's rates Diebold Nixdorf, loan Caa1

Moody's Investors Service said it assigned Diebold Nixdorf, Inc. a Caa1 corporate family rating, a Caa1-PD probability of default rating and a Caa1 to its $1.25 billion senior secured term loan, which enabled the company to emerge from bankruptcy in August. The speculative grade liquidity rating is SGL-3, and the outlook is positive.

“The Caa1 CFR reflects the company's historically seasonal cash flows, significant amount of restructuring costs, as well as difficulties achieving financial targets, balanced by an improved liquidity position with about $630 million of expected overall liquidity at year-end 2023. The rating also considers a constructive demand profile, tempered by a notable portion of point-in-time sales that are subject to economic cycles. Lastly, the leverage profile is a positive with debt to EBITDA (Moody's adjusted) expected to be near 3x in the near term,” Moody’s said in a press release.

The outlook reflects an expectation of modest revenue growth, yearly positive free cash flow and the preservation of adequate liquidity, the agency said.

S&P gives B to Diebold Nixdorf, loan

S&P said it assigned B ratings to Diebold Nixdorf Inc., which recently emerged from Chapter 11, and its $1.25 billion exit term loan maturing in 2028. The recovery rating on this debt is 3, indicating an estimated recovery of 60% (recovery range of 50%-70%) in default. The outlook is stable.

“The B rating and stable outlook reflect our view of an improved capital structure and enhanced liquidity position. Emerging from bankruptcy, Diebold has reduced its outstanding debt from $2.9 billion to $1.25 billion, a 55% total decrease. This will enable the company to operate at much lower levels of leverage, which we expect will be around 5x by the end of 2023 from over 20x at the height of its supply chain issues with its previous capital structure.

“The lower leverage, which we expect will continue to decline with EBITDA growth and further debt paydown, allows the company more operating flexibility to execute on its turnaround strategy, which mainly focuses on optimizing its supply chain footprint and addressing the long lead times and large working capital swings that occurred during the height of component shortages,” S&P said in a press release.

However, working against the company are, “The ongoing secular changes in consumer behavior and mature industry conditions limit significant growth opportunities. We expect ATM transaction volume and cash use to face growth challenges because of the proliferation of digital payments, as with mobile apps that enable consumers to transact payments using their bank accounts.”

Moody’s prunes Packers

Moody's Investors Service said it downgraded Packers Holdings, LLC's (PSSI) corporate family rating to Caa2 from Caa1, the probability of default rating to Caa2-PD from Caa1-PD and the company's senior secured first-lien credit facilities to Caa1 from B3, with a stable outlook.

Previously, the ratings were on review for downgrade. This rating action completes the review for downgrade, which the agency said it started on May 10.

“The downgrade of the corporate family rating and probability of default rating reflects PSSI's sustained high leverage, with debt to EBITDA that Moody's expects to remain above 10x through 2024. Moody's believes this increases the likelihood of default if the outstanding mezzanine loan due December 2025 cannot be adequately refinanced.

“Moreover, Moody's expects that the company's ability to achieve sufficient earnings growth over the next 12 months in order to refinance the mezzanine loan on reasonable economic terms before becoming current will prove challenging. The company's adequate liquidity provisions support the stable outlook,” the agency said in a press release.

The stable outlook reflects an estimate of adequate liquidity over the next 12-18 months, Moody’s said.

Moody's assigns A3 to ICE notes due 2028

Moody's Investors Service said it assigned an A3 rating to Intercontinental Exchange, Inc.'s planned $1 billion of senior unsecured notes due 2028.

“As part of its September 2023 Black Knight, Inc. (Ba2, ratings under review) acquisition, ICE had assumed $1 billion in Black Knight 3 5/8% senior unsecured notes due 2028. ICE's proposed senior notes issuance is part of an offer to exchange the Black Knight notes with newly issued ICE notes. ICE will not receive any cash as part of this issuance and offer exchange,” the agency said in a press release.

ICE's stable outlook remains unchanged.

S&P assigns BBB+ to Mitsubishi loans

S&P said it has assigned its BBB+ issue credit rating to Mitsubishi Corp.'s planned subordinated loans.

The agency said it based the rating on Mitsubishi’s issuer rating. It then deducted a notch for subordination and another for the option to defer interest payments.

The company plans to use all ¥46 billion to be raised through the subordinated loans to refinance part of an existing ¥100 billion in subordinated loans borrowed in November 2016 that it plans to repay before maturity on Nov. 16. It plans to repay the remaining ¥54 billion without any refinancing.

The outlook is stable.

Moody’s assigns Baa3 to Polaris notes

Moody's Investors Service said it assigned a Baa3 rating to Polaris Inc.’s new senior unsecured notes.

Polaris’ Baa3 long-term issuer rating remains unchanged, the agency said.

Polaris plans to use the proceeds to repay certain indebtedness outstanding under its unsecured credit facility and for general corporate purposes.

The outlook is stable.

Fitch rates Polaris notes BBB

Fitch Ratings said it assigned a BBB rating to Polaris, Inc.'s planned sale of $500 million of 6% senior unsecured notes.

The rating is aligned with the company’s BBB issuer default rating.

Polaris plans to use the proceeds for general corporate purposes, including repayment of certain debt under the company's credit agreement.

The outlook is stable.

S&P gives Polaris notes BBB

S&P said it assigned its BBB issue-level rating to Polaris Inc.'s senior unsecured notes which is expected to be $500 million, the same as the issuer credit rating.

Polaris intends to use the proceeds to refinance its $500 million incremental term loan due next month.

The outlook is stable.

S&P rates Sandoz notes BBB

S&P said it assigned its BBB issue rating to the €2 billion senior unsecured bonds issued by Sandoz Finance BV and guaranteed by Sandoz Group AG. The issuance is a triple-tranche transaction with maturities due 2027, 2030 and 2033, respectively.

The rating is the same as S&P’s ratings on Sandoz’s outstanding senior unsecured loans and notes.

The proceeds will be used to refinance the bridge loan facility and for general corporate purposes.

The outlook is stable.

Fitch rates Suncor notes BBB+

Fitch Ratings said it assigned BBB+ ratings to Suncor Energy, Inc.'s planned senior unsecured notes due 2025 and 2026. The combined issuance size is expected to be around C$1.5 billion.

Fitch last reviewed Suncor’s ratings, its BBB+ senior unsecured rating, on Oct. 12 and took no action.

The proceeds will be primarily used to fund Suncor's acquisition of TotalEnergies SE's stake in the Fort Hills oil sands mining project.

The outlook is stable.

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