As usual, we have a week’s worth of ratings actions on the debt of LBO-backed companies from ratings agencies Moody’s Investors Service and Standard & Poor’s. This week there were two upgrades and a downgrade.
Sponsor: Apollo Management and TPG
Action: S&P raised its corporate credit and issue-level ratings on the company and its operating subsidiary by one notch. S&P raised the corporate credit rating to ‘B-‘ from ‘CCC+’.
Highlight: “The ratings upgrade reflects our assessment that several actions taken by management over the past several quarters have positioned the company with sufficient capacity to weather the current downturn in the gaming sector,” said Standard & Poor’s credit analyst Ben Bubeck.
Company: American Residential Services
Sponsor: CI Capital Partners and Royal Palm Capital Partners
Action: Moody’s lowered the corporate family rating, probability of default rating and senior secured second lien note ratings to B3 from B2.
Highlight: “The B3 corporate family rating reflects the exposure of the company’s business lines to weather conditions, the possibility that high unemployment rates and tight credit market conditions could lead consumers to defer purchases or self-repair, a short track record of positive free cash flow and risks related to the company’s acquisition strategy.”
Company: Global Geophysical Services
Sponsor: Kelso & Co. and Wayzata Investment Partners
Action: Moody’s upgraded the company’s corporate family rating and probability of default rating to B2 from B3.
Highlight: “The upgrade of the CFR reflects that the initial public offering (IPO) and issuance of $200 million of notes significantly increases financial flexibility and decreases leverage on a net debt basis. Leverage (Debt / EBITDA) as of March 31, 2010, pro-forma for the IPO and note issuance and incorporating Moody’s adjustments to EBITDA for multi-client seismic library capital investments, was approximately 3.2x.”