Moody's rates Realogy loans B1

Moody's Investors Service said it assigned a B1 rating (LGD1, 7%) to the proposed amended first-lien credit facility of Realogy Corp. and affirmed the Caa2 corporate family rating and Caa3 probability-of-default rating, upgraded the speculative grade liquidity rating to SGL-3 from SGL-4 and changed the outlook to positive from stable.

The company also has a second-lien term loan rated Caa2 (LGD3, 34% from 32%), senior notes rated Caa3 (LGD3, 44% from 43%) and senior subordinated convertible notes rated Ca (LGD5, 70% from 69%).

Realogy has proposed a three-year extension of up to $608 million of the revolving credit facility, up to $2.5 billion of the term loan facility and its synthetic letter of credit facility. The upgrade of the SGL rating and the positive outlook are contingent upon the completion of the proposed refinancing, S&P noted..

The upgrade of the speculative grade liquidity rating reflects increased covenant headroom pro forma for the refinancing and increased balance sheet cash as a result of the $142 million in additional term loan borrowings, according to the agency.

The Caa2 corporate family rating and Caa3 probability-of-default rating reflect very high leverage, negative free cash flow and uncertainty regarding the timing and strength of a recovery of the residential housing market in the United States, the agency said.

Moody's expects a debt-to-EBITDA ratio before adjustments of about 14 times for the 2010 calendar year.

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