Moody's gives Ba2 to UPL notes

Moody's Investors Service said it assigned a Ba2 long-term junior subordinated rating to the proposed undated fixed-to-reset rate notes (hybrid) to be issued by UPL Corp. Ltd. The outlook is stable. UPL plans to use the proceeds predominantly to refinance debt.

“The Ba2 rating is two notches below UPL's Baa3 issuer rating, because the hybrid notes are deeply subordinated to other debt in the company's capital structure,” said Kaustubh Chaubal, a Moody's vice president and senior credit officer, in a press release.

The instrument is senior only to common equity, provides UPL with the option to defer coupons on a cumulative basis, steps up the coupon by up 25 basis points in year 10 and an additional step-up of 75 bps in year 25. In addition, the coupon steps up by 500 bps upon the occurrence of a change of control event and requires UPL to come current on any deferred interest if there are any payments on parity or junior instruments.

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