Moody’s ups ADT, rates loan Ba2

Moody's Investors Service upgraded ADT Inc.'s corporate family rating to Ba3 from B1 and probability of default rating to Ba3-PD from B1-PD, with a stable outlook.

Moody's also assigned a Ba2 rating to the proposed first-lien senior secured seven-year term loan and upgraded the ratings on the first-lien senior secured credit facilities and first-lien notes issued by Prime Security Services Borrower, LLC and ADT Security Corp. to Ba2 from Ba3, with a stable outlook.

Moody's also upgraded the rating on the senior secured second-lien notes issued by Prime Security Services Borrower to B2 from B3.

Moody's said it will withdraw the rating on the first-lien senior secured term loan B due 2026 upon repayment.

The speculative grade liquidity rating remains SGL-3.

The agency said the upgrade concludes the review initiated on Aug. 8 and reflects the company's debt reduction after the repayment of about $1.5 billion of debt with proceeds from the sale of its commercial business segment, which closed Oct. 2.

Moody's also expects that proceeds from the new seven-year term loan will be used to fully repay ADT's term loan B due 2026.

“The divestiture of the commercial business reduces scale and revenue diversification by eliminating a segment with lower capital intensity than ADT's core residential business, but the debt reduction lowers financial leverage and, combined with the proposed refinancing of the term loan B due 2026, diminishes refinancing risk,” the agency said in a news release.

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