Moody’s rates Domestic & General notes B2

Moody's Investors Service said it assigned a B2 rating to the new senior secured £175 million floating-rate notes due 2020 issued by Galaxy Bidco Ltd., a subsidiary of U.K.-based extended warranty and service provider Galaxy Finco Ltd. (Domestic & General Group Ltd.).

The outlook was changed to stable from positive.

Moody’s said the action reflects the following:

• The exchange offer of the new floating-rate notes to refinance existing floating-rate notes due 2019 on substantially the same terms;

• The expectation that the company will distribute up to £75 million to shareholders from cash and surplus funds within its insurance subsidiary; and

• The change in strategy toward greater insurance and maintenance service products, leading to increased costs and regulatory capital requirements.

At the same time, Moody's affirmed the company's corporate family rating of B2, the B3 rating on the £125 million senior unsecured notes issued by Galaxy Finco and the B2 rating on the £200 million senior secured fixed-rate notes due 2020 issued by Galaxy Bidco.

The agency also changed the probability of default rating of Galaxy Finco to B2-PD from B1-PD.

The B2 rating on the existing senior secured floating-rate notes will be withdrawn following their repayment on completion of the exchange offer, Moody’s said.

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