This Week in Portfolio Company Debt
As usual, we have a week’s worth of ratings actions on the debt of PE-backed companies from ratings agencies Moody’s and Standard & Poor’s. This week was pretty boring (Perhaps Moody’s was too busy preparing its Mega-buyout report?). There were just three ratings actions, one of which is a withdrawal on an already-bankrupt company. That company is Accuride, a company which Sun Capital took a stake in through its Sun Capital Securities hedge fund earlier this year. The company underwent a debt-for-equity swap as Sun Capital Securities transitioned out of its debt investment strategy to actively managed equity investments. Company: Rafaella Apparel Sponsor: Cerberus Capital Management LP Downgrade: Moody's downgraded the company’s corporate family and probability of default ratings to Caa3 from Caa1, and the rating on its 11.25% second lien notes to Ca from Caa2. Highlights: “Rafaella's liquidity is weak given its significant longer term debt maturities. However, balance sheet cash along with the expectation for modest free cash flow and revolver availability appear sufficient to cover cash needs over the next year.”
