Moody's ups Deluxe to positive, rates notes Ba2

Moody's Investors Service said it assigned a Ba2 (LGD3, 40%) rating to Deluxe Corp.'s proposed $200 million of senior notes.

The outlook was changed to positive from stable.

Proceeds from the new notes will be used to tender the company's existing 5% senior notes due 2012.

Deluxe's corporate family rating and probability of default rating remain unchanged at Ba2.

Moody's also downgraded the company's 7 3/8% senior notes due 2015 to Ba2 (LGD3, 40%) from Ba1 (LGD2, 24%), 5% senior notes due 2012 to B1 (LGD5, 86%) from Ba3 (LGD5, 73%) and 5 1/8% senior notes due 2014 to B1 (LGD5, 86%) from Ba3 (LGD5, 73%).

The ratings reflect ongoing pressure on the company's revenue base and operating margins and execution risks associated with the company's strategy to expand its small business services segment, as well as the expectation that Deluxe will continue to maintain a good liquidity profile, Moody's said.

The outlook revision reflects expectations that leverage will remain below 2.5 times, liquidity will remain strong and management will continue to apply excess cash to reduce debt balances, the agency added.

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