Moody's upgrades Education Management

Moody's Investors Service said it upgraded Education Management LLC's corporate family and probability-of-default ratings to B1 from B2, its $322.5 million senior secured revolving credit facility due 2012 and $1.19 billion senior secured term loan B due 2013 to B1 (LGD3, 42%) from B2 (LGD3, 44%), its $385 million 10¼% senior subordinated notes due 2016 to B3 (LGD6, 92%) from Caa1 (LGD6, 92%) and its speculative-grade liquidity rating to SGL-1 from SGL-2.

The $375 million 8¾% senior unsecured notes due 2014 were affirmed at B2 (LGD5, 75%).

The outlook is stable.

The agency said the upgrade reflects its expectations of continued reduction in financial leverage and ongoing strength in demand for higher education. The upgrade is further supported by stabilization in the availability of, and government commitment to, Title IV funding for student loans.

The ratings are supported by the recent strength in enrollment trends, the predictability in revenues associated with multi-year degree programs and expectations of strong liquidity, Moody's said.

The ratings remain constrained by funding pressures in the private student loan market and the fact that a very large portion of the company's revenues and enrollments are predicated on students' ability to borrow, Moody's said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.