Moody's assigns B1 to ADT

Moody's Investors Service said it assigned a B1 corporate family rating and a B1-PD probability of default rating to ADT Inc.

The agency concurrently affirmed the Ba3 ratings on the first-lien senior secured credit facilities and first-lien notes issued by Prime Security Services Borrower, LLC and ADT Security Corp., both subsidiaries of ADT, as well as the B3 rating on the second-lien notes issued by Prime Security Services. The speculative grade liquidity rating is SGL-3. The outlook remains positive.

Moody's also withdrew the B1 CFR and B1-PD ratings from Prime Security Services.

“ADT's credit ratings reflect its leading position as the largest residential alarm-monitoring and home automation services provider in the fragmented U.S. market. Improving operating and credit metrics support the credit, including higher recurring monthly revenue (RMR); lower gross attrition and subscriber acquisition costs; and diminishing debt/RMR leverage (about 27x as of March 2023).

“Moody's expects the company will continue to pursue financial policies that reduce leverage and allocate free cash flow to pay down debt, but the credit remains constrained by the potential for more aggressive financial strategies given the concentrated ownership by private equity sponsor Apollo, which remains the controlling shareholder,” the agency said in a press release.

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