Moody's cuts Travelport

Moody's Investors Service said it lowered the corporate family rating and probability of default rating of Travelport LLC to Caa1 from B3. The senior secured, senior unsecured and the subordinated instrument ratings were lowered to B1 from Ba3, to Caa2 from Caa1 and to Caa3 from Caa2, respectively.

The outlook remains negative.

The rating action reflects the further weakening in operating results in the half year to June with Travelport's EBITDA falling to $283 million from $295 million in 2010, the agency said. The company attributed this to higher cost of revenues and in particular employee bonuses.

The rating action further reflects Moody's view that covenant headroom is likely to weaken in coming quarters, in particular with the step up in the leverage covenant from 5.75 times currently to 5.5 times as of December and to 5.25 times as of June 2012, the agency added.

The negative outlook reflects the view that metrics are likely to remain weak for the rating, and possibly to weaken further, the agency noted.

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