Moody's upgraded Compass Group Diversified Holdings LLC's speculative grade liquidity rating to SGL-1 from SGL-2 and affirmed its B1 corporate family rating and B1-PD probability of default rating.
The ratings outlook is stable.
Moody's lead Compass Group analyst, Vice President Brian Silver, said the upgrade of the company's speculative grade liquidity rating reflects Compass' relatively high cash balances and full revolver availability, primarily facilitated by the proceeds from the sale of Manitoba Harvest and Clean Earth, two former subsidiaries. In affirming the company's corporate family rating, Moody's considered the broad support of Compass Group's solid industry and product diversification, a result of its controlling ownership stake in eight companies. Moody's also took into account the company's recent deleveraging to below 4x debt-to-EBITDA.
The stable outlook reflects the rating agency's expectation that the company will sustain debt-to-EBITDA below 5x over the next 12 to 18 months.
