Moody's rates TVL Finance notes B3

Moody's Investors Service said it assigned B3 ratings to the proposed £440 million senior secured floating rate notes due 2025 to be issued by TVL Finance plc, a wholly owned indirect subsidiary of Thame and London Ltd. (Travelodge).

Travelodge's existing ratings, including a B3 corporate family rating and B3-PD probability of default rating, are unaffected by the proposed debt issuance.

The outlook is stable.

The company's plan to refinance its exiting notes is credit neutral, Moody's said.

The estimated adjusted leverage pro-forma for the transaction was 9.3x as of March 2019, the agency said.

This is high for the current rating, but the company's liquidity profile remains adequate and the new structure will likely allow the company to reduce interest expense and extend maturity profile, Moody's said.

The ratings reflect the company's leading position in the U.K. budget hotel industry and the strong performance on the back of its successful refit program, which produced five years of positive results, the agency explained.

The ratings also consider the company's exposure to cyclical demand drivers and to the U.K. economy, as well as its material operating leverage, Moody's said.

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