Moody's: Concordia Bus view developing

Moody's Investors Service said it revised the outlook for Concordia Bus AB to developing from positive and affirmed its B3 corporate family and probability-of-default ratings as well as the B3 senior secured debt rating on the €130 million senior secured notes issued by Concordia Bus Nordic AB.

The outlook change was prompted by the company's targeted capital structure adjustments in coming weeks, including the pending refinancing of the €130 million senior secured notes due in August 2009, the agency said.

The B3 corporate family rating benefits from improvements in operating performance, free cash flow generation and credit metrics over the last quarters, the agency said.

The developing outlook reflects potential downward rating pressure linked to the execution of the pending refinancing of the senior secured notes maturing in August 2009, which Moody's said it views as challenging in the current market environment.

Concordia Bus's rating is constrained by the group's substantial financial leverage with a debt-to-EBITDA ratio of 6x at fiscal year-end 2008, absence of any backup liquidity facilities and initiation of dividend payouts, earnings volatility, ongoing need to win new bus tenders, revenue concentration on the Swedish market and capital intensity of the business, the agency said.

Ratings also reflect the company's market position, scale benefits, good visibility of revenue and consistent progress turning around profitability over recent quarters, Moody's said.

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