Moody’s ups Ideal Standard notes

Moody's Investors Service said it affirmed Ideal Standard International SA’s Ca corporate family rating and the B3 instrument rating of the series AA notes (15¾% priority PIK senior secured notes due 2018).

Concurrently, the agency upgraded the instrument ratings of the series A notes (15¾% priority PIK senior secured notes due 2018) and the series B notes (15¾%/11¾% PIK toggle series subordinated secured notes due 2018) to Caa1 and Caa2 from Caa3 and Ca, respectively.

Moody's also downgraded the company's probability of default rating (PDR) to Ca-PD from Caa3-PD.

The outlook for all ratings is negative.

Moody’s said the Ca and negative outlook reflects Ideal Standard's: (a) Unsustainably high Moody's adjusted leverage at more than 40 times expected 2016 EBITDA (including shareholder loans and 9 times excluding); (b) continued negative free cash flow to fund capex, working capital outflows, interest payments and restructuring costs; and (c) nearing debt maturity of the revolving credit facility in April 2017 and the senior secured notes on May 1, 2018.

The upgrades of the instrument ratings on the series A and series B notes reflect the higher expected recovery value driven by the sustainable improvement in operational performance, the agency added.

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