Moody's: Rural/Metro outlook stable

Moody's Investors Service said it revised Rural/Metro Corp.'s outlook to stable from negative and affirmed its B2 corporate family and probability-of-default ratings, and 12¾% senior discount notes due 2016 to Caa1 (LGD5, 88%) from Caa1 (LGD5, 89%).

Rural/Metro Operating Company, LLC's ratings were affirmed at senior secured revolving credit facility due 2010 Ba2 (LGD1, 9% from 12%), senior secured letter of credit facility due 2011 Ba2 (LGD1, 9% from 12%), senior secured term loan B due 2011 Ba2 (LGD1, 9% from 12%) and 9 7/8% senior subordinated notes due 2015 B2 (LGD4, 50% from 56%).

The change reflects the sustained improvement in operating margins from recent initiatives and the increased certainty of compliance with financial covenants, the agency said.

The affirmation reflects the expectation that the company will continue to operate with high financial leverage and modest interest coverage, Moody's said.

The rating is supported by the company's national presence in a highly fragmented industry, the agency said.

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