Moody’s reviews ADT for upgrade

Moody’s Investors Service said it placed ADT Inc.'s ratings under review for upgrade, including the B1 corporate family rating, the B1-PD probability of default rating, the Ba3 ratings on the first-lien senior secured credit facilities and first-lien notes issued by Prime Security Services Borrower, LLC and the ADT Security Corp., both subsidiaries of ADT, as well as the B3 rating on the second-lien notes issued by Prime Security Services Borrower. The speculative grade liquidity rating remains SGL-3.

Before the review, the outlook for ADT was positive.

“The review for upgrade was prompted by the company's announcement that it will pay down approximately $1.5 billion of debt with proceeds from the sale of its commercial business segment, which management expects to close before the end of 2023.

“The divestiture modestly reduces scale and revenue diversification by eliminating a segment with lower capital intensity than ADT's core residential business, but the pro forma debt reduction reduces financial leverage and refinancing risk,” Moody’s said in a press release.

The review also mirrors an expectation that ADT’s operating and credit metrics will keep improving over the next 12 to 18 months, the agency said.

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