Moody’s lifts First American Payment debt to Ba3

Moody's Investors Service said it affirmed First American Payment Systems, LP's B2 corporate family rating, B2-PD probability of default rating and Caa1 senior secured second-lien debt rating.

The senior secured first-lien debt rating was upgraded to Ba3 from B1.

The outlook is stable.

Over the past several quarters, First American Payment has been using free cash flow to repay debt by $10 million to $15 million per quarter, well in excess of the $625,000 quarterly mandatory amortization on the senior secured first-lien debt.

Because Moody’s believes the company will continue to use free cash flow for debt reduction, foregoing returns to shareholders, it anticipates a steady improvement in First American Payment’s financial leverage, with free cash flow to debt (Moody's adjusted) improving into the upper single digits and debt to EBITDA (Moody's adjusted) declining toward 6x over the next year.

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