Moody's affirms Arby's

Moody's Investors Service said it affirmed Arby's Restaurant Group, Inc.'s rating following an announcement by its parent company - Wendy's/Arby's Group, Inc. - that it intends to combine the credit facilities of Arby's and Wendy's International, Inc. under a single credit agreement.

Wendy's and Arby's are wholly owned subsidiaries of Wendy's/Arby's Group, Inc and are currently financed on a standalone basis with separate credit agreements, the agency said, noting that Arby's has a negative outlook.

Affirmed ratings include the company's corporate family rating at B2, probability of default rating at B3, senior secured revolving credit facility expiring 2011 at B1 (LGD3, 30%) and senior secured term loan B due 2012 at B1 (LGD3, 30%).

"The affirmation considers that despite management's expectation of the potential benefit to Arby's with respect to covenant compliance and financial flexibility, the consolidation of credit agreements does not alleviate operating concerns of the Arby's business. Weak consumer spending trends and increased competition will continue to pressure liquidity and debt protection measures, and remain the basis for Arby's current rating and outlook," stated Bill Fahy, vice president.

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