Moody's rates Rent-A-Center loan Ba2

Moody's Investors Service said it assigned a Ba2 rating to the proposed $725 million secured bank loan of Rent-A-Center, Inc. and affirmed the Ba2 corporate family as well as the senior subordinated note issue at Ba3.

The continuation of the positive outlook reflects Moody's opinion that ratings could be upgraded over the medium term once the company establishes a lengthier track record of sales improvement and Moody's becomes more comfortable with the company's financial policy.

Ratings affirmed include the $600 million existing secured bank loan at Ba2, the $300 million 7.5% senior subordinated notes due 2010 at Ba3 and the corporate family rating at Ba2.

Moody's said Rent-A-Center's corporate family rating of Ba2 reflects the balance of certain key quantitative and qualitative rating drivers that have low investment-grade characteristics with other attributes that are solidly non-investment grade.

Weighing down the ratings are the company's aggressive financial policies whereby virtually all operating cash flow is spent for share repurchases, capital investment and industry consolidation, the agency added.

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