Summary
Moody's Corporation (MCO) has entered into a new five-year senior, unsecured revolving credit facility totaling $1 billion, which commenced on November 14, 2018, and will expire in November 2023. This new facility replaces an existing $1 billion credit line that was scheduled to mature in May 2020. The proceeds are designated for general corporate purposes, indicating the company's flexibility in managing its operational and strategic needs. The terms of the new credit facility include interest rates tied to LIBOR plus a variable premium based on MCO's debt ratings, ranging from 80.5 to 122.5 basis points. Additionally, the company will pay quarterly facility fees, with rates dependent on its debt ratings. The agreement imposes covenants that restrict significant corporate actions such as mergers, asset sales, and incurring liens without lender approval. A key financial covenant requires MCO to maintain a Total Debt to EBITDA Ratio not exceeding 4 to 1, with a slightly higher threshold of 4.5 to 1 permitted for a limited period following substantial acquisitions.
Key Highlights
- 1Moody's entered into a new $1 billion, five-year senior unsecured revolving credit facility.
- 2The new facility replaces a previous $1 billion credit line maturing in May 2020.
- 3The credit facility expires in November 2023.
- 4Proceeds from the facility are intended for general corporate purposes.
- 5Interest rates are based on LIBOR plus a margin that varies with Moody's debt ratings.
- 6The facility includes covenants restricting mergers, asset sales, and the incurrence of liens.
- 7A key financial covenant requires maintaining a Total Debt to EBITDA Ratio of 4:1 or better, with provisions for temporary increases after large acquisitions.