Moody’s rates Pitney Bowes loan Ba1, cuts notes

Moody’s Investors Service said it assigned a Ba1 rating to Pitney Bowes Inc.’s proposed $900 million term loan and downgraded ratings on the senior unsecured notes to Ba3.

Moody’s affirmed the company’s Ba2 corporate family rating and Ba2-PD probability of default rating.

“Ratings for the senior secured term loan (Ba1) and senior unsecured notes (Ba3) reflect the overall probability of default of Pitney Bowes given the PDR of Ba2-PD and expectation for an average family recovery in a default scenario. Moody’s applies a one-notch downgrade to the instrument rating for the secured term loan to Ba1 from Baa3. There would be incremental downward pressure on current instrument ratings to the extent the company chooses to issue additional secured debt which would reduce the percentage cushion provided by the company’s unsecured notes,” the agency said in a press release.

Proceeds and $700 million in cash from the pending sale of Pitney Bowes’ software segment will be used to repay near-term maturities.

The outlook remains stable.

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