8-KMaterial AgreementsFinancial EventsOther Events+1

MOODYS CORP /DE/ 8-K Report, Material Agreement (Oct 4, 2007)

Filed October 4, 2007For Securities:MCO

Summary

Moody's Corporation has entered into a new five-year, $1 billion senior unsecured revolving credit facility that matures in September 2012. This facility, which replaces two previous credit lines totaling $1 billion, will primarily support the establishment of a $1 billion commercial paper program expected to launch the week of October 8, 2007. The company has already transferred $400 million in outstanding borrowings from the old facilities to the new one. The new credit facility is priced based on LIBOR plus a spread that varies between 16 and 40 basis points, dependent on Moody's "Earnings Coverage Ratio." Additionally, there are quarterly facility fees ranging from 4 to 10 basis points, and a utilization fee of 5 basis points if borrowings exceed 50% of the facility limit. The agreement includes covenants that restrict certain corporate actions like mergers, asset sales, and incurring liens, and mandates maintaining an Earnings Coverage Ratio of no more than 4 to 1.

Key Highlights

  • 1Moody's Corporation secured a new $1 billion, five-year senior unsecured revolving credit facility effective September 28, 2007.
  • 2The new facility matures in September 2012 and replaces prior credit lines totaling $1 billion.
  • 3It will support the launch of a $1 billion commercial paper program anticipated in early October 2007.
  • 4Existing borrowings of $400 million from previous facilities were transferred to the new credit line.
  • 5Interest rates are tied to LIBOR plus a spread based on the company's Earnings Coverage Ratio.
  • 6The agreement imposes covenants restricting asset sales, mergers, and the incurrence of liens.
  • 7A financial covenant requires Moody's to maintain an Earnings Coverage Ratio of no more than 4 to 1.

Frequently Asked Questions

The primary purpose of the new $1 billion credit facility is to support Moody's Corporation's upcoming establishment of a $1 billion commercial paper program, which is expected to be in place the week of October 8, 2007.

Interest on borrowings is based on LIBOR plus a premium ranging from 16 to 40 basis points, depending on Moody's Earnings Coverage Ratio. Additionally, there are quarterly facility fees (4-10 basis points) and a utilization fee (5 basis points if borrowings exceed 50% of the facility amount).

The agreement contains covenants that restrict Moody's and its subsidiaries from engaging in mergers, consolidations, asset sales, affiliate transactions, and sale-leaseback transactions without lender approval. It also restricts the incurrence of liens. Financially, the company must maintain an Earnings Coverage Ratio of not more than 4 to 1 at the end of each fiscal quarter.

The report indicates that $400 million of outstanding borrowings from prior facilities were transferred to the new $1 billion facility. The facility is designed to support a new commercial paper program, suggesting it provides liquidity and flexibility rather than necessarily indicating new, immediate debt issuance beyond what was previously financed.