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Moody's downgrades iPayment

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Moody's downgrades iPayment

Moody's has downgraded iPayment Inc. with a negative outlook, citing the company's "impending debt maturities" that will come due through May 2017.

The company's corporate family rating of Caa1 was lowered to Caa2, and its probability of default rating was downgraded to Caa3-PD from Caa1-PD.

Moody's added that the company has had a consistently high leverage of about 7x and will likely need to restructure its debt, leading to losses for some of its debt holders. Though the company has grown revenue for the past 10 quarters, the rating agency said the company's EBITDA continues to decline. Management turnover in recent quarters and a pending lawsuit by iPayment's former CEO have also created uncertainties about the risk of default and losses for debtholders in a potential restructuring, Moody's explained.

The negative outlook reflects looming debt maturities and an increasing risk of default and debt impairment, according to the rating agency.

IPayment named an interim CEO and president in September after Carl Grimstad said he will be leaving the company.