A day after Diebold Nixdorf Inc. disclosed that it is at risk of violating certain covenants governing its credit agreement as soon as this quarter, Moody's downgraded the payment company's corporate family rating to B3 from B1 and revised the company's outlook to negative from stable.
The rating agency also downgraded the company's probability of default rating to B3-PD from B1-PD, the ratings on the payment processor's first lien credit facilities to B3 from B1, the senior unsecured notes rating to Caa2 from B3, and the speculative grade liquidity rating to SGL-4 from SGL-2.
According to Moody's, Diebold's liquidity is presently weak and "meaningfully diminished." The company's corporate family rating is also constrained by Diebold's elevated gross debt leverage, challenges in the restructuring program execution, and limited borrowing capacity. The operating environment in the company's core automated teller machine market is also expected to be challenging in the coming year, the rating agency added.
Moody's revised the outlook to negative to reflect its expectation that Diebold's credit agreement will need to be amended to loosen financial covenants and ensure access to its revolving credit facility.