Moody's: iPayment outlook negative

Moody's Investors Service said it lowered iPayment Inc.'s speculative grade liquidity rating to SGL-3 from SGL-2 and revised the outlook to negative from stable.

The action reflects limited headroom under the company's bank financial covenants, which constrains the company's liquidity profile as well as weaker-than-expected financial results, according to the agency.

iPayment's B2 corporate family rating, B1 ratings (LGD3, 36%) on senior secured credit facilities and Caa1 rating (LGD5, 89%) on senior subordinated notes were affirmed, the agency noted.

The B2 corporate family rating reflects iPayment's financial leverage as well as small scale in the highly competitive merchant transaction processing landscape, Moody's said.

The rating is supported by the company's recurring transaction-based revenue stream from clients under multi-year contracts, appropriate credit metrics, cash flow generation capabilities and diverse customer base, the agency said.

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