Moody's rates Falcon loan Ba3

Moody's Investors Service said it assigned a provisional Ba3 rating to the proposed $250 million term loan B to be issued by Falcon Group Holdings (Cayman) Ltd. and affirmed Falcon's Ba3 corporate family rating. The outlook is stable.

The agency said Falcon operates as a provider of trade finance to corporate clients. The company acts as a principal, funding clients directly, with the ability to refinance transactions. Falcon hedges the vast majority of the transactions it carries out and is exposed to limited balance sheet risk, Moody’s said.

However, Falcon plans to use the proceeds to increase its direct exposure to the banks issuing advance payment guarantees, stand-by letters or other trade financial instrument to back the loans of Falcon's customers for a period of typically 180 days.

Moody’s said that although the transactions will increase Falcon's risk profile, it will also reduce its reliance on a limited number of top-tier banks, which have traditionally acquired its hedged trade finance transactions. Moody's also believes that the proposed funding transaction would also allow Falcon to diversify its funding structure and gain flexibility on the use of its available funds.

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