Moody's rates Ipreo loan B1, notes Caa2

Moody's Investors Service said it assigned a B3 corporate family rating and a B3-PD probability of default rating to Ipreo Holdings LLC, a B1 (LGD3) rating to the company's proposed senior credit facility ($320 million senior secured term loan due 2021 and $45 million revolving credit facility due 2019) and a Caa2 (LGD5) rating to its new $200 million senior notes due 2022. The outlook is stable.

The new debt instruments will be issued by a newly formed second-tier parent holding company named US LLC 2. Proceeds from the term loan and notes plus $487 million of equity will be used to finance the leveraged buyout of Ipreo by some funds managed and controlled by Goldman Sachs Merchant Banking Division and Blackstone Group from Kohlberg Kravis Roberts & Co. LP for a total purchase price of about $962 million.

The agency said Ipreo's B3 corporate family rating reflects the relatively high leverage following its second leveraged buyout in less than three years, small revenue base in the financial data and new-issue workflow software industry and exposure to volatile primary capital markets activity.

Pro forma for the contemplated buyout, the ratio of total debt to EBITDA will climb to 8.8 times from 4.3 times as of March. Leverage is high compared to B3-rated global industry peers, but Moody’s believes the business model can accommodate a more leveraged capital structure due to Ipreo's strong revenue visibility and history of positive free cash flow generation.

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