Moody’s rates Asplundh loan Ba1

Moody’s Ratings said it rated Asplundh Tree Expert, LLC’s planned $1 billion seven-year senior secured term loan Ba1.

The agency also affirmed Asplundh’s Ba1 corporate family rating, Ba1-PD probability of default rating and its Ba1 senior secured bank credit facility ratings but revised the outlook to negative from stable.

The loan will be used primarily to fund a sizable acquisition and provide liquidity for near-term acquisitions.

"Asplundh's ratings affirmation and negative outlook reflect the company's shift in financial strategy toward growth through acquisitions. Leverage pro forma for the April 2024 acquisition exceeds 3.5x, well above the company's prior leverage target. We believe the company will maintain leverage at a higher level to fund future opportunities," said Justin Remsen, a Moody's assistant vice president, in a press release.

"The onset of Asplundh's growth strategy follows three consecutive years of lower profit margins as elevated fuel and wage costs outpaced price increases. The company's ability and willingness to maintain leverage below 3.5x and generate consistent free cash flow are key considerations during our outlook period," added Remsen.

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