Moody’s assigns B3 to Waystar loan

Moody’s Investors Service said it assigned a B3 rating to Waystar Technologies, Inc.'s proposed amend and extend of its $2.2 billion backed senior secured first-lien term loan that includes $469 million of incremental first-lien debt and downgraded the outstanding backed senior secured first-lien revolving credit facility to B3 from B2. Moody’s also revised the outlook to positive from stable.

The agency also affirmed Waystar’s B3 corporate family and B3-PD probability of default ratings.

Waystar will use the loan to repay the remaining $448 million of the company's unrated senior secured second-lien term loan and pay related fees & expenses. The transaction will also extend the maturity of the first-lien term loan to October 2029 from October 2026. The revolving credit facility maturity remains unchanged at Oct. 6, 2028.

The revolver downgrade reflects the loss of the second-lien loan as a cushion for first-lien lenders, the agency explained. “The change in outlook to positive from stable and ratings affirmation reflect Moody's view of the transaction as a positive credit development, as it will reduce the company's overall interest expense and extends the company's debt maturity profile, but it is otherwise leverage neutral. Moody's considers the company's debt to EBITDA leverage to be elevated at 7x after expensing capitalized software costs for the 12 months ended Sept. 30, 2023, pro forma for the transaction. Moody's anticipates that the transaction will lower the company's annual interest expense by roughly $20 million in 2024 versus Moody's previous forecast,” the agency said in a press release.

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