Moody's cuts Wendy's notes, rates loan Ba2

Moody's Investors Service said it assigned a Ba2 (LGD2, 17%) rating to Wendy's/Arby's Restaurants, LLC's proposed $150 million senior secured revolving credit facility due 2015 and $500 million senior secured term loan B due 2017.

Moody's also said it downgraded its $550 million senior unsecured notes due 2016 to B3 (LGD4, 62%) from B2 (LGD3, 46%) and affirmed its corporate family rating and probability of default rating at B2. Wendy International Inc.'s $100 million 7% senior unsecured notes due Dec. 15, 2025 was affirmed at Caa1 (LGD6, 91% from LGD 5, 86%) and $225 million 6.2% senior unsecured notes due June 14, 2014 at Caa1 (LGD6, 91% from LGD 5, 86%).

The outlook is stable.

The affirmation reflects the company's high leverage and weak coverage, Moody's said, as well as its good liquidity and meaningful scale.

The ratings also reflect Wendy's reasonable brand strength versus its peers but also consider its more modest scale and limited day-part offering than either McDonald's or Burger King, the agency said.

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