Moody’s alters Quest view to negative

Moody’s Investors Service said it revised its outlook for Quest Identity Intermediate Ltd. to negative from stable and affirmed its B3 ratings. The agency also affirmed the B2 senior secured first-lien bank facilities rating and Caa2 senior secured second-lien term loan rating. Quests loans were issued through its OID-OL Holdings, Inc. subsidiary.

“The negative outlook reflects Quest's very high financial leverage of mid 9x (Moody's adjusted) as of the LTM period ended April 2023, weaker than expected operating performance, and Moody's expectation of negative free cash flow generation over the next 12 to 18 months,” the agency said in a press release.

Since the Federal Reserve started raising interest rates, Quest has suffered a substantial hike in interest costs.

“With uncertainty regarding future Fed rate hikes and the trajectory of interest rates, Moody's expects Quest to utilize a portion of the revolving credit facility to fund cash flow deficits which will not only further increase interest costs but also potentially increase capital structure sustainability risks over the longer term,” Moody’s said.

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