Moody's raises Gates

Moody's Ratings said it upgraded Gates Global LLC's corporate family rating to Ba3 from B1, probability of default rating to Ba3-PD from B1-PD, senior secured bank credit facility rating to Ba2 from Ba3, and senior unsecured notes rating to B2 from B3. The company's speculative grade liquidity rating is unchanged at SGL-1.

“The upgrade of Gates' ratings reflects Moody's expectation for continued stability in operational performance and improvement in profitability driven by ongoing margin expansion. In addition, debt to EBITDA will decline below 3.5 times over the next year while the company generates over $250 million of free cash flow.

“The upgrade is also driven by governance considerations including Moody's expectation that the concentrated ownership by the Blackstone Group will continue to decline. There is currently only one Blackstone representative remaining on the mostly independent board of directors. However, Moody's also expects that the company may engage in share repurchases as Blackstone winds down its ownership to avoid equity dilution,” Moody’s said in a press release.

The outlook is stable.

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