Moody’s cuts team.blue loans

Moody’s Ratings said it lowered its ratings to B3 from B2 for team.blue Finco Sarl’s €1.11 billion senior secured first-lien term loan B that is being upsized via a €250 million add-on issuance due 2028, the €50 million senior secured delayed-draw term loan due 2028 and the €99 million senior secured revolving credit facility due 2027.

Concurrently, the agency said it affirmed the borrower’s B3 corporate family and B3-PD probability of default ratings.

“The downgrade of the senior secured term loans ratings to B3 is a result of an increase of first-lien debt in the last two years while the second-lien debt remained constant at €200 million, no longer providing sufficient loss absorption capacity to warrant a notch up on the first-lien debt relative to the B3 CFR,” Moody’s said in a press release.

The add-on will mostly be used to repay the payment-in-kind (PIK) notes outside of the restricted group and will add more than 1x to the Moody's adjusted gross debt/EBITDA that will increase to 8x on a full-year 2023 pro-forma basis. Although Moody's-adjusted leverage is outside of the expectations for the B3 CFR pro forma for the transaction, the agency said it expects continued growth will lower leverage to the expected guidance in the next 12 months.

The outlook remains stable.

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