8-KMaterial AgreementsFinancial EventsExhibits & Filings

MOODYS CORP /DE/ 8-K Report, Material Agreement (Sep 13, 2007)

Filed September 13, 2007For Securities:MCO

Summary

Moody's Corporation (MCO) announced on September 13, 2007, the successful closing of a $300 million private placement of its 6.06% Series 2007-1 Senior Unsecured Notes due 2017. This issuance, effective September 7, 2007, is part of a larger Note Purchase Agreement that allows for the potential issuance of up to an additional $500 million in senior notes over the next five years. The proceeds from this offering are designated to repay a portion of outstanding bank debts, which were previously incurred for general corporate purposes, including share repurchases. This transaction represents a strategic move by Moody's to refinance existing debt and potentially fund future corporate activities. The terms of the notes include a fixed 6.06% interest rate and a 10-year maturity. Notably, the agreement includes covenants that restrict certain company actions, such as asset disposals and significant mergers, and sets a leverage ratio limit. The issuance of these notes also impacts existing credit facilities, reducing the available borrowing capacity under a recent interim credit facility. Investors should note the unsecured nature of these notes and the provisions for potential mandatory prepayment upon a change of control event.

Key Highlights

  • 1Moody's Corporation closed a $300 million private placement of 6.06% Series 2007-1 Senior Unsecured Notes due 2017.
  • 2The issuance occurred on September 7, 2007, and was reported on September 13, 2007.
  • 3Proceeds will be used to repay a portion of bank debts incurred for general corporate purposes, including share repurchases.
  • 4The company has the option to issue up to an additional $500 million in senior notes under the same Note Purchase Agreement within five years.
  • 5The Series 2007-1 Notes are unsecured and carry a fixed interest rate of 6.06%, maturing on September 7, 2017.
  • 6The Note Purchase Agreement includes covenants limiting affiliate transactions, asset disposals, liens, and sale-leaseback transactions, with a Total Debt to EBITDA Ratio not to exceed 4.0 to 1.0.
  • 7A 'change of control' event may trigger mandatory prepayment of the notes at the holders' option.

Frequently Asked Questions

The primary purpose of the $300 million debt issuance is to repay a portion of existing bank debts that were previously incurred for general corporate purposes, including funding share repurchases.

The Series 2007-1 Notes bear a fixed interest rate of 6.06%, mature on September 7, 2017, and are unsecured. Interest payments are semi-annual, and there are provisions for prepayment, including a 'make-whole' premium and mandatory prepayment upon a change of control event.

Yes, the issuance reduces the available borrowing capacity under Moody's $500 million interim credit facility, entered into on August 8, 2007, to $200 million. Moody's also retains the flexibility to issue up to an additional $500 million in senior notes under the new Note Purchase Agreement.

The agreement imposes several covenants that restrict the company and certain subsidiaries from engaging in transactions with affiliates, disposing of assets, incurring new liens, and entering into sale and leaseback transactions. Additionally, Moody's must maintain a Total Debt to EBITDA Ratio below 4.0 to 1.0 and is restricted from consolidating or merging with other corporations without meeting specific criteria.