Moody's boosts American Achievement

Moody's Investors Service said it upgraded American Achievement Group Holding Corp.'s corporate family rating to Caa1 from Caa2 and its probability-of-default rating to Caa2 from Caa3.

The agency also raised the company's $109 million (current value) senior pay-in-kind notes due 2012 to Caa3 (LGD5, 79%) from Ca and American Achievement Corp.'s $150 million senior subordinated notes due 2012 to B2 (LGD2, 19%) from B3 (LGD2, 20%).

American Achievement Corp.'s $25 million senior secured revolving credit facility due 2011 and $47 million senior secured term loan due 2011 were affirmed at B1 (LGD1, 2%).

The upgrade is due largely to debt reduction and improved liquidity as a result of the company's amended credit agreement which provides an extension of the company's revolving credit facility until March 2011 and more flexibility under its financial covenants, the agency said.

The outlook is stable.

Moody's said the Caa1 corporate family rating reflects the company's still very high leverage, weak coverage of total interest expense, small scale, narrow product focus and some regional concentration in the Southern Unites States.

The rating is supported by the company's substantial market shares in each of its niche product segments, its high customer retention rates, good operating margins and its highly efficient manufacturing footprint, the agency noted.

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