Moody’s upgrades Rent-A-Center

Moody's Investors Service said it upgraded Rent-A-Center, Inc.'s corporate family rating to B1 from B2 and probability of default rating to B1-PD from B2-PD.

The upgrades also include the company’s senior secured credit facility to Ba1 (LGD 1) from Ba2 (LGD 1) and senior unsecured debt ratings to B2 (LGD 4) from B3 (LGD 4).

Rent-A-Center's SGL-3 speculative grade liquidity rating is unchanged.

The outlook was changed to stable from developing.

The upgrades reflect the significant improvement in Rent-A-Center's operating performance and credit metrics due to the successful implementation of its strategic turnaround plan and focus on debt reduction, Moody's said.

While debt maturities loom, the agency said it believes that the company will be able to successfully refinance its capital structure given expected further operating improvement, earnings growth, low net debt levels and further debt reduction plans.

The ratings reflect the company’s solid position in the consumer rent-to-own industry and its historical track record of maintaining relatively strong and stable debt-protection measures, Moody’s said.

The ratings are constrained by its need to extend its debt-maturity profile, moderate business risk and potential impact from government legislation or litigation that may occur from time to time, the agency said.

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