Moody's ups Target Hospitality notes

Moody's Investors Service said it upgraded Arrow BidCo LLC's 9˝% senior secured second-lien notes due March 2024 to B2 from Caa1 and assigned Target Hospitality Corp. a B1 corporate family rating, a B1-PD probability of default rating and a speculative grade liquidity rating of SGL-1. The outlook is stable for both issuers. The agency withdrew the B3 CFR, the B3-PDR and the SGL-2 assigned to Arrow BidCo.

“The rating actions follow the announcement of a large contract in the government segment of Target under which the company will provide additional housing and related services to the U.S. government for humanitarian aid missions. The expanded contract includes minimum revenue commitments that will increase revenue significantly for 2022 and 2023. Moody's expects cash flow and credit metrics to also improve,” the agency said in a press release.

Moody’s said it estimates leverage to decline to 1.1x by the end of 2022 from 2.9x as of the end of March 2022 and liquidity to improve further over the next 12 to 15 months.

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