Moody’s changes former Rent-A-Center view

Moody's Investors Service said it changed the outlook for Upbound Group, Inc. to negative from stable.

Upbound was formerly Rent-A-Center, Inc.

At the same time, Moody's affirmed all other ratings, including the Ba2 corporate family rating, the Ba2-PD probability of default rating, the Ba2 senior secured term loan rating and the B1 senior unsecured note rating.

The speculative grade liquidity rating was lowered to SGL-2 (good) from SGL-1 (very good).

The agency said the change in outlook reflects the challenges Upbound faces in maintaining its operating performance and credit metrics in 2023 given Moody's expectation that the company's credit-constrained customers will continue to reduce their discretionary spending in the face of macroeconomic uncertainty, including ongoing high inflation and following a pandemic-related demand pull forward in key categories offered by Upbound including furniture and accessories, appliances, and electronics.

This follows Upbound's weaker than expected operating performance in 2022 due to the significant underwriting challenges experienced at its Acima segment which caused the segment's portfolio size to decline by over 20% year-over-year, Moody’s added.

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