Moody's rates Trade Me loan B1

Moody's Investors Service said it assigned a B1 corporate family rating to Titan AcquisitionCo New Zealand Ltd. (Trade Me).

The outlook is stable.

Moody's also said it assigned a B1 senior secured rating to Trade Me's proposed 842 million in New Zealand dollars first-lien senior secured term loan facility guaranteed by Titan GuarantorCo New Zealand.

The proceeds will be used to fund the acquisition of Trade Me Group Ltd. and its subsidiaries by the financial sponsor, private equity firm Apax Partners, Moody's explained.

Trade Me's B1 corporate family rating benefits from its leading market position, strong brand awareness and large audience following in New Zealand, as well as its multiple business segments that supports the company's credit profile by providing diversification, the agency said.

The company's motor, property, jobs and marketplace segments help increase traffic in each area of Trade Me, Moody's said.

The sector benefits from the continued migration of classifieds advertising from print to online as New Zealand has lagged behind other developed markets in terms of online penetration rates, but is expected to follow a similar trajectory, the agency said.

The rating is constrained by the company's high financial leverage with adjusted debt-to-EBITDA expected to register at about 6.4x by year-end 2019, Moody's said.

But Moody's said it expects Trade Me to achieve steady de-leveraging upon completion of the transaction, supported by strong earnings growth and solid free cash flow generation, enabling debt reduction, the agency said.

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