Moody’s ups Unilabs notes, view stable

Moody's Investors Service said it changed the outlook on the B3 corporate family rating and B3-PD probability of default rating of Unilabs Midholding AB to stable from negative.

Concurrently, the agency affirmed the corporate family rating, probability of default rating and the Caa2 (LGD5) rating of the €200 million PIK toggle notes due Jan. 15, 2019, issued by Unilabs.

Moody’s said the outlook change and affirmation reflect the company’s recent robust performance on the back of organic revenue growth and cost-cutting, and improved leverage below the downgrade trigger of 7 times.

The agency also upgraded the ratings of the €355 million senior secured fixed-rate notes due July 15, 2018 and the €130 million senior secured floating-rate notes due July 15, 2018, to B2 (LGD3) from B3 (LGD3).

The outlook is stable.

The upgrade of the senior secured notes to B2 reflects the increased equity cushion provided by the PIK toggle notes (Caa2) whose amount will continue to grow through the accrual of interest at a high rate of 13% annually. Hence, under Moody's Loss Given Default methodology, the secured notes are rated one notch above the corporate family rating and the PIK toggle notes two notches below.

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