Moody's rates Exterran loan Ba2

Moody's Investors Service said it assigned Ba2 corporate family and probability-of-default ratings to Exterran Holdings, Inc., the company formed from the merger between Hanover Compressor Co. and Universal Compression Holdings, Inc.

Moody's also assigned Ba2 ratings (LGD3, 40%) to the company's proposed $850 million senior secured revolver and $800 million term loan A, along with a speculative grade liquidity rating of SGL-2.

The outlook is stable.

Proceeds will be used to refinance existing Hanover and Universal debt. The convertible senior notes remain under review for upgrade pending the completion of the merger, Moody's said.

The corporate family rating reflects "substantial scale and market position yielded by the merger of Hanover and Universal, tempered by high debt levels and uncertainties regarding the future capital structure and leverage profile," Pete Speer, Moody's vice president and senior analyst, said in a written statement.

Moody's said it remains concerned about the future capital structure and leverage levels of Exterran, Universal Compression Partners, LP and the combined enterprise. The company also is restrained by the capital intensity of the compression business and the significant inherent challenges for domestic growth, the agency said.

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