Moody's rates Hyatt notes Baa2

Moody's Investors said it assigned a Baa2 rating to Hyatt Hotels Corp.'s proposed issuance of $350 million 10-year senior notes.

The proceeds will be used to fund Hyatt's redemption of its 5.75% senior notes due 2015 and the repurchase of a portion of its $250 million 6.875% senior notes due 2019 through a tender offer.

The agency said Hyatt's Baa2 rating reflects very strong liquidity, a branded hotel portfolio, hard asset value reflected by the owned hotel portfolio, good credit metrics and Moody's expectation that the company will execute its stepped-up growth plans and returns to shareholders largely from cash flow and existing cash balances.

Hyatt's ratings are constrained by the high degree of earnings volatility through economic cycles due to its concentration in owned hotels in the upper-upscale lodging segment and smaller scale relative to its industry peers, Moody's said.

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