Moody’s rates Jo-Ann loan B1

Moody's Investors Service said it assigned a B1 rating to Jo-Ann Stores LLC's $850 million secured term loan.

The unsecured operating notes also were downgraded from B3 to Caa1.

All of the other ratings, including Jo-Ann Stores Holdings Inc.'s corporate family rating of B2, were affirmed.

The outlook is stable.

The B1 rating on the company’s new $850 million term loan reflects the increase in overall secured borrowings as the company refinances its secured credit facilities and repays a majority of the $450 million of operating company notes, Moody’s explained.

The refinancing of its senior credit facilities is expected to be overall leverage neutral and has no rating effect on the corporate credit rating, the agency added.

The ratings reflect the company’s weak overall quantitative credit profile with a debt-to-EBITDA ratio of 5.2 x, Moody’s said.

The company’s credit profile is supported by the positive characteristics of the craft and hobby category, which has a loyal customer base, positive demographic trends and a lower level of cyclicality relative to other areas of specialty retail, the agency said.

These aspects drive stable performance and credit metrics even in challenging economic times, Moody’s said.

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