Moody's lifts Innophos, rates loans Ba2

Moody's Investors Service said it raised Innophos Holdings, Inc.'s corporate family and probability of default ratings to Ba2 from Ba3, assigned Ba2 (LGD4, 50%) ratings to its $125 million senior secured first-lien revolving credit facility due 2015 and $100 million senior secured term loan due 2015 and affirmed the SGL-1 speculative grade liquidity rating.

The agency also affirmed Innophos Inc.'s $190 million 8 7/8% senior subordinated notes due 2014 at Ba3 with a revised loss-given-default assessment of LGD5, 79% (formerly LGD4, 59%).

The outlook is stable.

The proceeds from the new facilities will be used to repay the 8 7/8% notes, which are in the process of being called, and replace the $65 million revolver due 2013.

The agency said the upgrade reflects Innophos' solid financial performance, which occurred despite significant macroeconomic headwinds in 2009 and the loss of a major customer of its Mexican operations; debt reduction and low leverage for its rating category; stable EBITDA margins; strong financial strength and cost position metrics; positive resolution of arbitration with its primary phosphate rock supplier to its Mexican subsidiary; and a continuation of recovery in sales volumes.

The ratings are constrained by the company's modest size, expected limited sales growth opportunities in its current markets and other business risks stemming from its narrow product portfolio, reliance on outside suppliers of phosphate rock or merchant green acid, limited operating diversification and legal issues, Moody's said.

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