Moody's drops iPayment

Moody's Investors Service said it downgraded iPayment, Inc.'s corporate family rating to B3 from B2 and its probability of default rating to B3-PD from B2-PD.

The downgrade reflects iPayment's elevated financial risk profile, declining operating performance and the challenges in growing merchant accounts amid escalating competition, the agency noted.

Moody's also lowered iPayment's speculative-grade liquidity rating to SGL-3 from SGL-2, reflecting the company's only adequate levels of liquidity in the next 12 to 15 months.

The outlook is negative, reflecting the potential for further deterioration in credit metrics, the agency stated.

The downgrade of the corporate family rating to B3 was based on Moody's view that iPayment's leverage will remain near 7.5x over the foreseeable future and that EBITDA could continue to weaken through 2013, primarily due to the decline in the number of merchant accounts to which the company provides processing services.

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