Fitch cuts Uniti, rates notes B

Fitch Ratings said it assigned a B/RR1 rating to Uniti Group LP's planned issuance of $2.25 billion of senior secured notes. The notes are on rating watch negative.

Fitch also downgraded Uniti Group Inc.'s and Uniti Fiber Holdings, Inc.'s long-term issuer default ratings to CCC from B. The IDRs and debt security ratings remain on rating watch negative. In addition, Fitch downgraded Uniti Group LP's senior secured revolver, term loan and notes to B/RR1 from BB/RR1, senior unsecured notes to CCC-/RR5 from B-/RR5 and Uniti Fiber's senior unsecured 4% exchangeable notes to CCC-/RR5 from B-/RR5.

The downgrade reflects the potential material adverse outcome of the adversary proceeding filed against Uniti by Windstream Holdings, Inc. as well as the potential for litigation to continue over a longer time horizon than expected.

Moody’s cuts Alpha Bidco loan

Moody’s Investors Service said it downgraded Alpha AB Bidco BV’s €830 million guaranteed senior secured first-lien term loan B, which will include an expected add-on of €100 million incremental term loan B, and the €150 million existing guaranteed senior secured first-lien revolving credit facility to B3 from B2. The downgrade of the senior secured ratings to B3 reflects the change in the mix of debt as well as the weak security package and guarantor coverage. The outlook is stable.

The rating action follows the announcement Alpha AB, or Ammega, will issue an expected add-on of €100 million to its senior secured first-lien term loan B facility, with the proceeds used to repay €100 million of revolver drawings. At the same time, the company acquired Midwest Industrial Rubber, Inc. The acquisition was completed on Jan. 22 and was 100% equity funded.

The affirmation reflects Ammega’s enhanced business profile following the acquisition of Midwest Industrial and Moody’s expectation the company will be able to delever towards 7x in the next 12-18 months through its ongoing cost-saving initiatives. However, due to the highly leveraged capital structure, the company remains weakly positioned in the rating category and any deviation from the business plan could increase the negative pressure on the ratings, Moody’s said.

S&P cuts Commercial Barge

S&P said it downgraded Commercial Barge Line Co. to CC from CCC and lowered the rating on the company's secured term loan to C from CCC-. The company’s parent American Commercial Lines Inc. entered a restructuring support agreement with a substantial majority of its term loan lenders. To implement the agreement, the company expects to file Chapter 11 bankruptcy in the coming days.

The outlook is negative.

Fitch downgrades Micro Focus

Fitch Ratings said it downgraded the long-term issuer default ratings for Micro Focus International plc to BB- from BB. Fitch also downgraded the IDRs of MA FinanceCo LLC and Seattle Spinco, Inc. to BB- from BB, and lowered the senior secured debt rating to BB/RR1 from BB+/RR1 for their respective first-lien credit facilities. The outlook remains stable.

“The rating actions reflect Fitch's view that the significant challenges faced by Micro Focus following the transformative acquisition of the Hewlett Packard Enterprise carve-out in 2017 will result in operating metrics that exceed our negative sensitivity thresholds over the ratings horizon,” Fitch said in a press release.

The company has grappled with seemingly reoccurring struggles regarding integration and go-to-market strategies, despite a strong track record in cost reduction and synergy execution following past mergers and acquisitions.

Moody's trims Speedcast International

Moody's Investors Service said it downgraded to B3 from B2 Speedcast International Ltd.'s corporate family and senior secured term loan ratings. The outlook remains negative.

“The downgrade of Speedcast's ratings mainly reflects the continued weakening in the company's operating performance, as highlighted by its repeated earnings guidance misses,” said Sean Hwang, a Moody's Analyst, in a press release. “Such persistently sluggish performance increases concern over the company's liquidity, which narrowed significantly during 2019.”

On Monday, Speedcast announced its EBITDA for 2019 would be around 10% below its previous guidance of $140 million-$150 million. This EBITDA measure excludes the impact of the change in lease accounting, but includes one-off gains, such as procurement savings.

Moody's estimates this result would represent a like-for-like decline of around 10%-15% from a year earlier, after adjusting for the acquisition in December 2018 of Globecomm Systems Inc.

S&P puts Infor on positive watch

S&P said it placed all its ratings for Infor Inc. on CreditWatch with positive implications following the announcement Koch Equity Development LLC has agreed to acquire the remaining 30% equity stake in the company held by Golden Gate Capital, making Infor a wholly owned subsidiary of Koch Industries.

“The CreditWatch placement reflects our view of the potential implied support Infor may receive from Koch consistent with Koch's approach to its other subsidiaries, such as Molex Electronic Technologies LLC, Invista Equities LLC, and Guardian Industries Resources LLC. Additionally, we believe that Infor's full ownership by Koch Industries may lead it to maintain a more conservative balance sheet given the much lower leverage levels at Koch's other portfolio companies,” said S&P in a press release.

S&P plans to meet with management to discuss its business plans, pro forma capital structure and long-term financial policies.

Moody's changes Liquidnet view to negative

Moody's Investors Service said it changed to negative from stable the outlook on Liquidnet Holdings, Inc. Moody's affirmed Liquidnet's Ba3 corporate family rating and Ba3 senior secured term loan rating.

The change in outlook to negative reflects declining revenue and profitability at Liquidnet as a result of a weaker trading environment for alternative trading venues in 2019. Liquidnet's narrow revenue base and reliance on trading volume have resulted in EBITDA margin and debt leverage deterioration, with possible weaknesses in its cost flexibility, said Moody's.

Despite the firm's weaker financial profile, Moody's said Liquidnet retains ample liquidity, with a significant balance of cash on hand and a still modest amount of debt leverage for its rating level.

Moody’s assigns Allegiant loan Ba3

Moody’s Investors Service said it assigned a Ba3 rating to Allegiant Travel Co.’s amended senior secured term loan B due 2024. The company expects to reprice the loan, saving up to 150 basis points in annual interest. The outstanding principal will increase by $100 million, to $546.6 million, with no change to the Feb. 5, 2024 maturity date.

Allegiant will use the incremental proceeds to repay the $81 million outstanding on the company’s revolver and the rest for general corporate purposes. The amendments to the term loan do not affect the company’s Ba3 corporate family rating or stable outlook.

“The ratings reflect the financial benefits of Allegiant’s differentiated airline model that provides limited competition across about 70% of its route system. Moody’s expects Allegiant to continue to achieve one of the strongest operating margins of the 22 airlines it rates, supported by the relative fuel efficiency and reliability of its all-Airbus A320ceo family fleet,” said Moody’s in a press release.

Moody's rates Block facility, notes Ba1, B1

Moody's Investors Service said it assigned a Ba1 rating to Block Communications Inc.’s proposed $285 million senior secured credit facility consisting of a five-year $110 million revolver and a seven-year $175 million term loan B and a B1 rating to $300 million of new eight-year senior unsecured notes. The Baa3 rating on the existing senior secured credit facility and Ba3 rating on the existing senior unsecured notes will be withdrawn at the close of the contemplated transaction. The outlook is stable.

The credit facility will be guaranteed by each material, wholly-owned restricted subsidiary, with certain exceptions, and collateralized by a first lien on substantially all assets and capital stock owned by the borrower and guarantors, with certain exceptions. The revolving credit facility includes customary financial covenants, including a total leverage ratio test of 5.25x, stepping down to 5x at the end of 2021. The term loan has no financial covenants.

The notes will be guaranteed, jointly and severally, by each of Block's current and certain of its future domestic subsidiaries.

Moody’s considers the transaction to be credit positive and affirmed Block’s Ba3 corporate family rating and Ba3-PD probability of default rating.

Moody's assigns Caa1 to Uniti notes

Moody's Investors Service said it assigned a Caa1 to Uniti Group Inc.'s proposed $1.75 billion of senior secured notes due 2025, in line with existing senior secured debt. The proceeds from will be used to partially repay the term loan B, repay a portion of the borrowings from the revolver and for transaction fees and expenses. All other ratings including the company's Caa2 corporate family rating and negative outlook are unchanged.

S&P rates CSL Capital notes CCC

S&P assigned its CCC issue-level rating and 2 recovery rating to CSL Capital LLC's proposed $1.75 billion senior secured notes due 2025, Uniti Fiber Holdings Inc. is a co-issuer. CSL Capital LLC is a wholly owned subsidiary of Uniti Group Inc. The 2 recovery rating indicates the expectation for substantial (70%-90%; rounded estimate: 80%) recovery in the event of a payment default.

“We expect the company to use the net proceeds from these notes to repay about $1.65 billion of CSL Capital's $2.05 billion senior secured term loan B, repay outstanding borrowings under its $576 million revolving credit facility due 2022 ($575 million outstanding as of Sept. 30, 2019) and pay related fees and expenses,” S&P said in a press release.

In conjunction with the secured note offering, Uniti obtained consent to waive any defaults arising from a potential going-concern qualification with respect to its 2019 audited financials. In exchange for the waiver, Uniti will cancel 10% of its current revolver commitment and pay a higher interest rate on its drawings under the facility. S&P’s CCC- rating and negative outlook on Uniti are unaffected by the offering.

S&P rates First American Payment loan B

S&P said it assigned a B with a recovery rating of 3 to First American Payment Systems LP’s planned $275 million first-lien term loan due 2027 to fully refinance its $189 million first-lien term loan due 2024 and $80 million second-lien term loan due 2024.

The agency removed all its First American ratings from CreditWatch with negative implications and affirmed its B issuer credit rating.

“The affirmation reflects our expectation that the company will complete its refinancing and maintain an ample cushion under the covenant on its new credit facilities. The proposed facilities will contain a 6.75x maximum senior secured net leverage ratio covenant, which will provide it with ample cushion. We also expect the company to realize more than $3 million of annual interest expense savings from the elimination of the second lien term loan upon completion of the refinancing,” said S&P in a press release.

The outlook is stable.

Moody's rates Informatica loans B1, Caa1

Moody's Investors Service said it assigned B1 and Caa1 ratings to Informatica LLC's proposed about $2.4 billion of first-lien credit facilities, including a $150 million revolving credit facility, and $475 million of second-lien term loans, respectively. Moody's also changed Informatica's ratings outlook to negative from stable.

The company will use the proceeds to refinance indebtedness and augment cash balances. Moody's will withdraw the ratings for Informatica's existing first-lien term loans and senior notes upon the repayment of debt at the close of refinancing.

The negative outlook reflects Informatica's decline in cash flow from operations in 2019 and very high leverage that has resulted from an increase in debt since April 2019 and erosion in EBITDA in 2019. Pro forma for the proposed refinancing and based on preliminary results for 2019, Moody's estimates Informatica's total debt to EBITDA (Moody's adjusted) is about 9x, or the low 8x when a change in deferred revenues is included in EBITDA, an increase of about 1x from a year ago.

Moody’s also affirmed the company’s B2 rating.

Moody’s assigns Loparex loan B2

Moody’s Investors Service said it assigned a B2 rating to PHM Netherlands Midco BV’s proposed $207 million euro equivalent first-lien term loan, which together with a $45 million HoldCo PIK loan will be used to refinance the equity bridge that funded the purchase of Infiana Group Gmbh and to combine both companies. The outlook is stable. PHM does business as Loparex.

The agency affirmed PHM’s B3 corporate family rating and B3-PD probability of default rating.

The B2 rating on the first-lien credit facilities, which include a $50 million five-year revolving credit facility, a $370 million seven-year term loan and $207 million euro equivalent loan are one notch above the B3 corporate family rating reflecting their priority position in the capital structure, which also include an upsized $140 million eight-year second-lien term loan rated Caa2.

Fitch rates Southwest notes A-

Fitch Ratings said it assigned Southwest Airlines Co.'s proposed unsecured notes a rating of A-. Southwest plans to sell $500 million of unsecured bonds. The debt will rank equally with Southwest's existing unsecured issuances, and the proceeds will be used for general corporate purposes.

A regular offering of this size was contemplated in Fitch's base case forecast and does not have a material impact on leverage calculations, the agency said.

S&P rates Zayo Group, loans, notes B

S&P said it assigned B ratings to Zayo Group Holdings Inc. and its proposed first-lien senior secured credit facilities, which comprise a $750 million revolving credit facility due 2025 and $5.1 billion first-lien term loan due 2027, and the proposed $1 billion of senior secured notes due 2027. The agency also assigned a recovery rating of 3 to the facilities and notes. The recovery rating of 3 indicates the expectation of meaningful (50%-70%; rounded estimate: 60%) recovery in the event of a payment default.

S&P assigned a CCC+ issue-level rating and a 6 recovery rating to the proposed $2.1 billion of senior unsecured notes due 2028. The 6 recovery rating reflects the expectation for negligible (0%-10%; rounded estimate: 0%) recovery in the event of a payment default.

The agency said it views Zayo Group LLC as a core subsidiary of Zayo Group Holdings and equalized the ratings on Zayo Group LLC with its ratings on Zayo Group Holdings. S&P lowered the issuer credit rating on Zayo Group LLC to B from B and removed it from CreditWatch with negative implications, where the agency placed it on March 7, 2019.

The outlook is stable.

Moody's gives Centene notes Ba1

Moody's Investors Service said it assigned a Ba1 senior unsecured debt rating to Centene Corp.'s planned offering of about $2 billion of senior unsecured debt, due February 2030. Proceeds will be used to refinance about $1 billion of 6 1/8% notes due 2024 and $1 billion of 4¾% notes due 2022. The 2024 notes are callable now; the 2022 notes are scheduled to be called in May.

Separately, Moody's assigned a Ba1 rating to the $1.95 billion of senior notes due 2025 and 2026 issued by Centene in exchange for WellCare Health Plans, Inc.'s outstanding notes, pursuant to the exchange offer which started on Nov. 1 and was completed last month.

Since the proceeds of the $2 billion new issuance will be used to refinance debt and the $1.95 billion was issued in an exchange, there will not be an effect on Centene's leverage, though will be a temporary increase in leverage because the 2022 notes will not be called until May.

The outlook on Centene is stable.

Fitch assigns Centene notes BB+

Fitch Ratings said it assigned a BB+ rating to the $2 billion senior unsecured note issuance of Centene Corp. Proceeds will partially fund a redemption of $2 billion in senior notes, and consequently, financial leverage is not expected to change materially with the transaction.

The new $2 billion 10-year senior debt issuance is rated at the same level as Centene's existing senior unsecured notes, which is one notch below the holding company issuer default rating and reflects standard notching based on Fitch's rating criteria.

Centene expects to redeem $1 billion of its 4¾% senior notes maturing in 2022 as well as $1 billion of its 6 1/8% senior notes maturing in 2024. Fitch said it expects the annual interest expense savings on this transaction to be significant.

“CNC's financial leverage ratio at the close of the acquisition is estimated to be just below 40% and debt-to-EBITDA is estimated to be 3.9x, both of which are above expectations for the company's current rating category. The capitalization and leverage score carries a higher influence on the rating, and consequently, progress toward stated deleveraging targets would put upward pressure on the company's ratings,” said Fitch in a press release.

S&P rates Centene notes BBB-

S&P said it assigned its BBB- debt rating to Centene Corp.'s proposed 10-year senior unsecured notes. The notes will be equal in right of payment to other senior debt and structurally subordinated to the obligations of its subsidiaries.

Centene intends to use the proceeds to redeem/repurchase its $1 billion of 6 1/8% notes due 2024; and $1 billion of 4¾% billion notes due 2022. “We don't expect any impact on the company's financial leverage since the issuance is being used to call a similar amount of already outstanding debt. This will likely lower Centene's interest burden because current rates will help lower the cost of the borrowing versus those on the 2022 and 2024 notes,” said S&P in a press release.

Fitch revises HP view downward

Fitch Ratings said it affirmed HP Inc.’s long-term issuer default rating at BBB+ and revised the outlook to negative from stable.

The change in outlook comes after the company’s CFO said HP will continue to evaluate ways to create added shareholder value. Fitch said this could mean added mergers and acquisitions or added returns of capital to shareholders, which could signal a shift in financial policy. “Fitch believes an apparent willingness to loosen financial policy materially warrants an outlook revision at this juncture,” the agency said in a press release.

The affirmation reflects that despite recent operational challenges as reflected by unexpected mid-single-digit declines in HP’s print business, the company’s credit protection metrics are very well positioned for its BBB+ rating, due to its fairly conservative capital structure. Fitch sees the risk of erosion in these metrics with continued declines in the print segment and a reduced tailwind from Win10 PC refresh cycle. However, in the base case, key credit protection metrics still provide ample headroom (0.7x-0.8x to the 2x gross leverage negative sensitivity) to handle potential operational challenges.

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