Moody's up Tenneco, rates notes B2

Moody's Investors Service said it raised Tenneco Inc.'s corporate family and probability of default ratings to B1 from B2, along with its first-lien senior secured revolving credit facility to Ba1 (LGD 2, 11%) from Ba2 (LGD 2, 12%), $130 million first-lien senior secured letter of credit/revolving loan facility to Ba1 (LGD 2, 11%) from Ba2 (LGD 2, 12%), $150 million first-lien senior secured term loan B due 2016 to Ba1 (LGD 2, 11%) from Ba2 (LGD 2, 12%) and 8 5/8% guaranteed senior subordinated notes due November 2014 to B3 (LGD 6, 97%) from Caa1 (LGD 5, 86%).

The agency also said it assigned a B2 rating (LGD 4, 66%) to its new $500 million senior unsecured notes due 2020, and affirmed its 7¾% senior unsecured notes due 2018 at B2 (LGD 4, 66%) and 8 1/8% guaranteed senior unsecured notes due 2015 at B2 (LGD 4, 66%).

Tenneco announced an offering of $500 million of new senior unsecured notes and the tender offer and consent solicitation of the existing $500 million 8 5/8% guaranteed senior subordinated notes.

The proceeds will be used to fund the tender offer and consent solicitation. Moody's said it expects Tenneco to redeem any untendered amounts following the completion of the tender.

The upgrade incorporates the company's better-than-anticipated performance over the past two quarters and reduced debt service costs from the company's recent and proposed debt refinancing, the agency said.

Moody's said it expects that Tenneco's continued improving performance, combined with the interest expense savings from the company's current and recent debt refinancing, to solidly support the rating.

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