Moody's cuts, rates Curo loan Caa1

Moody's Investors Service said it downgraded Curo Group Holdings Corp.'s corporate family rating to Caa2 from Caa1 and its senior secured debt rating to Caa3 from Caa1, which now ranks senior unsecured. The agency also assigned a Caa1 senior secured debt rating to its new $682 million of 1.5 lien senior secured notes. Curo's outlook was changed to negative from stable.

“The downgrade of Curo's CFR to Caa2 from Caa1 was driven by deterioration in the company's credit profile over the past year following the acquisitions of Heights Finance and First Heritage, two near-prime installment businesses, and the sale of its legacy U.S. deep subprime lending business. The company also acquired a Canadian point-of-sale (POS) financing business, Flexiti, which has also pressured earnings given the rapid growth in that business. These debt-funded transactions have pressured earnings and increased leverage, resulting in a weaker credit profile,” Moody’s said in a press release.

The agency said it expects Curo to deliver a weak financial performance in the next 12-18 months.

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