Moody’s trims Vaco loans

Moody's Investors Service said it lowered the first-lien credit facilities issued at Vaco Holdings, LLC to B3 from B2. The facility consists of a senior secured first-lien revolving credit facility that expires in 2027 and a senior secured first-lien term loan due 2029. Moody's also withdrew Vaco Holdings’ B2 corporate family rating and B2-PD probability of default ratings.

The agency concurrently assigned a B3 CFR and B3-PD PDR to Vaco Intermediate Holdings, LLC. The outlook is stable.

“The assignment of the B3 CFR and B3-PDR to Vaco Intermediate Holdings, LLC is effectively representative of a one-notch downgrade of the company's CFR and PDR ratings and reflects the year-over-year declines in revenue and profitability from weaker demand for permanent placement and contract and consulting services that Moody's expects will continue in the second half of 2023.

“This is due to macroeconomic uncertainty resulting in longer hiring cycles in the finance, accounting, and IT sectors. Moody's anticipates credit metrics will weaken with debt to EBITDA reaching the high 6x after Moody's adjustments by fiscal year-end 2023 that will be sustained through 2024. Moody's expects annual revenue to decline by 10% in 2023 before gradually stabilizing in 2024 with free cash flow to debt between 1% and 2% during the next 12 months,” the agency said in a press release.

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