Moody's: Vangent outlook negative

Moody's Investors Service said it changed the outlook of Vangent, Inc. to negative from stable and affirmed the company's B2 corporate family and probability-of-default ratings, and the speculative grade liquidity rating of SGL-3.

The agency also affirmed the company's $50 million senior secured revolver due 2012 at Ba3 (LGD2, 23% from 25%), $240 million senior secured term loan due 2013 at Ba3 (LGD2, 23% from 25%) and $190 million 9 5/8% senior subordinated notes due 2015 at Caa1 (LGD5, 79% from 84%).

The change in outlook reflects concern about Vangent's profitability, weaker interest coverage and free cash flow, dependence on key contracts, financial covenant ratio stepdowns over 2009 to 2010 and its larger, better capitalized competitors.

The affirmation of Vangent's B2 corporate family rating reflects the company's historically high contract win rate, a good total backlog level, an adequate liquidity profile and likelihood of continued outsourcing of federal information technology processing work, the agency said.

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