Moody's rates IHS notes Ba1

Moody's Investors Service said it assigned a Ba1 corporate family rating, a Ba1-PD probability of default rating and an SGL-1 speculative grade liquidity rating to IHS Inc. and a Ba1 (LGD4) rating to its proposed $500 million senior notes due 2022. The outlook is stable.

The note proceeds will be used to refinance debt.

The agency said the Ba1 rating reflects IHS' strong revenue growth prospects, high EBITDA margins of about 25%, good EBITDA to free cash flow conversion and high proportion of recurring revenues (77% of revenues) with high renewal rates, especially with the larger customers that comprise the bulk of the company's revenues and profitability.

However, Moody's expects the company to remain acquisitive and leverage to likely remain in the 3.5 times to 4.0 times range over the next 12 to 18 months as free cash flow is deployed primarily toward acquisitions. Pro forma for the refinancing, IHS' leverage will be 4.2 times.

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