Moody's raises Rent-A-Center

Moody's Investors Service said it raised Rent-A-Center, Inc.'s ratings, including its corporate family rating to Ba2 from Ba3, probability of default rating to Ba2-PD from Ba3-PD, senior secured term loan to Ba2 from Ba3 and senior unsecured notes to B1 from B2. Concurrently, the agency upgraded Rent-A-Center's speculative grade liquidity rating to SGL-1 from SGL-2.

"The CFR upgrade reflects Rent-A-Center's better than expected operating performance, with increased earnings and debt reduction leading to an improvement in its already solid credit metrics," stated Mike Zuccaro, a Moody's vice president, in a press release.

The SGL upgrade reflects Rent-A-Center's very good liquidity, supported by its $145 million of cash at June 30, and an expectation for positive free cash flow well in excess of growth-related working capital, capital spending and dividends. Liquidity is further supported by ample excess availability under its $550 million asset based revolving credit facility, long dated debt maturity profile and lack of financial maintenance covenants in its term loan, the agency said.

The outlook is stable.

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