Moody’s trims Diamond Resorts

Moody's Investors Service said it downgraded the ratings of Diamond Resorts International, Inc., including its corporate family rating to B3 from B2, its probability of default rating to B3-PD from B2-PD, its senior secured rating to B2 from B1 and its senior unsecured rating to Caa2 from Caa1.

The outlook is stable.

The action resolves the review for downgrade that was initiated on Aug. 30.

Moody’s said the downgrade reflects a view that Diamond's leverage will remain above 6.5x for the foreseeable future, a level set as a trigger for downgrade at the time of the leveraged buyout by Apollo Global Management in 2016.

“The company's leverage has remained high as a result of several factors including earnings pressure caused by increased loan loss reserves due to third party driven defaults, an effort to shift to more new owner sales, and lowered down payment requirements with eased borrowing criteria to drive these new member sales in 2018 (this practice was curtailed in the second half of 2018),” the agency said in a news release.

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