Moody's gives B1 to Loyalty Ventures loans

Moody's Investors Service said it assigned first-time ratings to Loyalty Ventures Inc., including a B1 corporate family rating, a B1-PD probability of default rating, a B1 rating to the proposed $500 million senior secured term loan B due in 2027, a B1 to the proposed $175 million senior secured term loan A due in 2026, a B1 to the proposed $150 million senior secured revolving credit facility due in 2026, and an SGL-1 speculative grade liquidity rating.

The outlook is stable.

Loyalty Ventures will use the net proceeds from its proposed term loans, combined with cash from its balance sheet, to fund a $750 million dividend to the company's former parent, Alliance Data Systems. As part of the transaction, Loyalty Ventures will be spun out into a publicly traded entity. The transaction is expected to close in the fourth quarter of 2021.

“Loyalty Ventures' rating reflects its good credit metrics, and our expectation that it will generate positive free cash flow over the next 12-18 months which supports its very good liquidity,” said Jonathan Reid, a Moody's analyst, in a news release.

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