PE Debt Watch (Upgrades & Downgrades)

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.

This week Moody’s has some distaste for the Intergraph dividend recap, downgrading the company’s corporate family rating and calling the payment, which increases the company’s leverage by one and a half turns, “aggressive.”

Company: HCA Inc.
Sponsor: Bain Capital, KKR.
Action: Moody’s Investors Service assigned a Ba3 rating to the company’s proposed offering of $1.0 billion of first lien senior secured notes due 2020. Moody’s also affirmed the existing ratings of HCA, including the B2 corporate family and probability of default ratings.
Highlight: “Much like the secured note offerings completed in 2009, the current transaction continues to chip away at the considerable amount of bank debt scheduled to mature in the 2012 and 2013 time frame,” said Dean Diaz, Vice President — Senior Credit Officer at Moody’s.

Company: Intergraph Corporation
Sponsor: Hellman & Friedman LLC, TPG and JMI Equity
Action: Moody’s downgraded the company’s family rating to B2 from B1, assigned a B1 rating to a new incremental $300 million first lien term loan, and downgraded the existing revolving credit facility and first lien term loan ratings to B1 from Ba3 and second lien term loan rating to Caa1 from B3.
Highlight: The rating downgrades reflect Intergraph’s increased debt leverage from incremental debt issuance as it pursues an aggressive dividend payout. This action will increase debt leverage by 1.6x, to approximately 5.2x.

View Past Downgrade and Upgrade Lists Here