Moody's changes Rocket outlook to stable

Moody's Investors Service said it changed Rocket Software, Inc.'s outlook to stable from negative and affirmed the company's corporate family rating at B2, probability of default rating at B2-PD, first-lien senior secured credit facility at B1 (LGD3) and second-lien senior secured credit facility at Caa1 (LGD6).

The agency said the outlook change to stable reflects the expectation that leverage will remain under 6 times over the near term. Moody's changed the outlook to negative on April 23, 2014 when the company announced it was considering a debt-financed transaction that would have increased leverage to 6.5 times.

The B2 rating is driven by Rocket's strong EBITDA margins (estimated at close to 40%) and strong levels of free cash flow but offset by the company's willingness to aggressively use debt to fund equity distributions and acquisitions, Moody’s said.

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