Moody's rates Fender loans B1, B3

Moody's Investors Service said it assigned a B1 rating to Fender Musical Instrument Corp.'s $170 million term loan and $50 million revolving credit facility under the first-lien senior secured credit facility and B3 to the second-lien senior secured credit facility.

At the same time, Moody's assigned a B1 to Fender's senior implied rating and a Caa1 issuer rating. The outlook is stable.

Moody's said the ratings reflect Fender's leading brand names (principally Fender and Squier), leading market position in the guitar industry, consistent cash flow generation and its ability to successfully integrate acquisitions.

These factors are offset by high financial leverage and thin cash flow interest coverage following the leveraged recapitalization, Moody's said.

Moody's said it expects December 2005 leverage (funded debt/ EBITDA) to range between 3.7x and 4.0x and 2004 pro forma interest coverage (EBITDA/interest) is expected to be 2.8x.

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