Moody's: Dollarama view stable

Moody's Investors Service said it changed the outlook of Dollarama Group Holdings LP and Dollarama Group LP to stable from negative and affirmed Dollarama Holdings' B1 corporate family and probability-of-default ratings, senior floating-rate deferred interest notes at B3 (LGD5, 84%) and SGL-2 speculative grade liquidity rating.

Also affirmed were Dollarama Group LP's senior subordinated notes at B2 (LGD4, 63%) and its senior secured term loans and senior secured revolving facility at Ba1 (LGD2, 19%).

The outlook change reflects the company's continued strong operating performance and cash flow generation, which, combined with modest debt reduction, helped leverage ratio fall below the 6.5 times hurdle that was set in December 2006.

The B1 corporate family rating considers Dollarama's strong franchise and leading market share in the Canadian extreme value retailing segment, the agency said.

Ratings are constrained by the sizable amount of debt and low tangible asset coverage, the company's relatively small scale and the aggressive financial policy of Bain Capital Partners LLC, which positions certain credit metrics weakly within the rating category, Moody's said.

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