Moody's may up LPL

Moody's Investors Service said it placed on review for upgrade the B1 corporate family and bank credit facility ratings of LPL Holdings, Inc. as well as the B3 senior subordinated rating.

According to Moody's, the action recognizes the steady progress LPL has made in building its business and increasing its cash generation, thus reducing cash flow leverage and improving interest coverage.

LPL's adjusted debt-to-EBITDA ratio improved to 4.5 times in 2007 from 5.4 times in 2006.

"LPL has continued to demonstrate strong performance, growing its base of advisors and client assets both organically and through bolt-on acquisitions of underperforming introducing brokers," Moody's assistant vice president Alexander Yavorsky said in a written statement.

"Although pressuring margins in the near-term, the acquisition strategy is understandably aimed at capitalizing on LPL's operating leverage and superior technology. If expenses are successfully reduced, the strategy should pay off and, absent significant additional borrowing, result in further de-levering," Yavorsky said.

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