Moody's: Education Management view positive

Moody's Investors Service said it affirmed the B1 corporate family and probability-of-default ratings of Education Management LLC and changed the outlook to positive.

The agency also affirmed the $443 million senior secured revolver due 2012 at B1 (LGD3, 43%), $1,127 million (originally $1,185 million) senior secured term loan C due 2013 at B1 (LGD3, 43%), $375 million 8¾% senior unsecured notes due 2014 at B2 (LGD 5, 75%) and $69 million (originally $385 million) 10.25% senior subordinated notes due 2016 at B3 (LGD 6, 96%).

The action follows the company's initial public offering and application of the proceeds to retire about $316 million of its 10.25% subordinated notes, according to the agency.

Moody's also affirmed the company's SGL-1 speculative grade liquidity rating.

Ratings are supported by stronger credit metrics, the recent strength in enrollment trends, the predictability in revenues associated with multi-year degree programs and expectations of very good liquidity, the agency said.

The change in outlook also reflects expectation of improving credit metrics as the company benefits from an environment where higher unemployment increases the need for retraining and educational certifications/degrees for high school graduates, the agency said.

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