Published on yesterday on Feb 26th
Rating Action: Moody's downgrades Sungard Availability Services' CFR to
Caa1; outlook negative
26 Feb 2019
New York, February 26, 2019 -- Moody's Investors Service ("Moody's") downgraded Sungard Availability Services Capital Inc.'s ("Sungard AS") corporate family and probability of default ratings ("CFR" and "PDR",respectively) to Caa1 and Caa1-PD from B3 and B3-PD, respectively. In addition, Moody's downgraded the senior secured debt ratings to B3 from B1 and the senior unsecured bond rating to Caa3 from Caa2. The rating outlook remains negative.
"The downgrade reflects uncertainty about Sungard A-- ability to refinance debt maturities over the next few years given weak revenue, profitability and cash flow trends."
"Moody's expects that revenues and profits will continue to decrease through at least the first half of 2019 and there is uncertainty as to whether Sungard AS can start to produce positive free cash flow (FCF)."
"With ongoing uncertainty as to whether the company can stem revenue and profitability declines, Sungard AS may find it challenging to refinance its debt over the next three years."
"The negative outlook reflects uncertainty as to whether the company can achieve an inflection point and stabilize or grow profitability over the next 18 months. Moody's projects negative to flat FCF over the next year, which is still hampered by high interest costs estimated to be about $120 million for 2019."
"Sungard AS' ratings could be downgraded if further revenue and profit declines are expected to be sustained, liquidity deteriorates, or the probability of a default increases."