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Moody's rates Travelport loan Caa3
Moody’s Investors Service said it assigned a Caa3 rating to Travelport Finance (Luxembourg) Sarl's new junior priority first-lien backed senior secured term loan.
Concurrently, the agency appended a limited default /LD designation to Toro Private Holdings II, Ltd.'s (Travelport) Caa2-PD probability of default rating, changing it to Caa2-PD/LD to reflect the company's distressed exchange. Travelport's Caa2 corporate family rating and Travelport Finance (Luxembourg)'s B3 rating on the priority lien senior secured term loans are unchanged.
These rating actions follow a $200 million equity injection from owners Elliott Private Equity and Siris Capital, and the completion on Thursday of a debt exchange on 100% of Travelport's senior secured first-lien term loan totaling over $2 billion, the agency said. This exchange was completed at par, but the terms of the newly borrowed instrument provide Travelport with the option to pay the entire interest margin in-kind until the end of 2024.
"In our view, these transactions constitute a distressed exchange, which is an event of default under Moody's definitions, reflected in the /LD designation we have appended to Travelport's PDR. The transactions are key governance factors. They combine default avoidance and losses for creditors because a liquidity injection was necessary to address the March 31 interest payment while the magnitude of the cash-to-payment-in-kind (PIK) interest conversion and the size of the underlying interest obligation is large," said Frederic Duranson, a Moody's vice president, senior analyst and lead analyst for Travelport, in a press release.
The outlook is negative.
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