Moody's assigned DiamondResorts International Inc. a new corporate family rating of B2 witha stable outlook, while S&P Global Ratings downgraded the company'scorporate credit rating to B from B+ and removed all of the company's ratingsfrom CreditWatch negative.
Moody's also assigned Diamond Resorts a B2-PD probability ofdefault rating, B1 LGD-3 senior secured bank credit facility rating and Caa1 LGD-5senior unsecured note rating. It also assigned a B1 rating to the company'sproposed senior secured credit facilities worth $1.3 billion and a Caa1 ratingto its planned $600 million senior unsecured notes.
Following the completion of the company's deal to beacquired by fundsmanaged by affiliates of Apollo Global Management LLC, Moody's will alsowithdraw Diamond Resorts Corp.'s B1 corporate family rating, B1-PD probabilityof default rating and B1, LGD 3 senior secured bank credit facility rating,which were placed on review fordowngrade after the dealwas announced.
In a note, Moody's attributed the B2 corporate family ratingin large part to its view that the company's consolidated debt/EBITDA willremain high at or near 6x in the near "for the foreseeable future."Its outlook on Diamond Resorts is stable, citing the company's timeshare sectorconcentration and expectations for expanded borrowings and positive earningsgrowth for the company.
Separately, S&P said the downgrade takes into accountDiamond Resorts' "substantially increased" leverage, owing to theadditional debt issued to finance its acquisition by the Apollo funds. Thedowngrade follows the rating agency's move to place Diamond Resorts' ratings onCreditWatch negative after the company disclosed the Apollo funds deal.
The rating agency also assigned a B+ issue-level rating anda 2 recovery rating to the company's proposed $1.3 billion senior securedcredit facility, comprising a $100 million revolver and a $1.2 billion termloan.
S&P's outlook on Diamond Resorts is stable, citing itsexpectation that the company will repay its debt using excess cash flow andlower its leverage to below 6x debt-to-EBITDA by 2017.
S&P Global Ratingsand S&P Global Market Intelligence are owned by S&P Global Inc.