Moody’s lifts FleetCor, facilities to Ba2

Moody's Investors Service said it upgraded FleetCor Technologies Operating Co. LLC's corporate family and probability of default ratings to Ba2 from Ba3 and Ba2-PD from Ba3-PD, respectively.

The agency also upgraded the ratings on the senior secured credit facilities to Ba2 from Ba3 and the speculative grade liquidity rating to SGL-1 from SGL-2.

The outlook is stable.

Moody’s said the upgrade reflects its expectation of continued strong operating performance from FleetCor and steady de-leveraging after the debt funded acquisition of Comdata Inc. for $3.45 billion in November 2014.

FleetCor has reduced leverage to 3.5 times adjusted debt to EBITDA at March 31 from 5.4 times at Dec. 31, 2014.

Although the company announced plans in March to acquire Servicos e Tecnologia de Pagamentos SA for about $1.1 billion using cash and borrowings under its existing credit facility, the agency expects that adjusted debt to EBITDA will return back to the mid-3 times level (from about 4 times) within one year following the close, which is expected to occur in the third quarter of 2016 subject to regulatory approvals.

Similar to what transpired after the Comdata purchase, the improvement in leverage will be driven by a combination of debt repayment and rapid EBITDA growth, which Moody's projects will increase by at least high single digits organically.

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