Again, Moody’s Investors Service Has Raised Its Ratings On BRP
Moody's Investors Service has again raised the ratings outlook of Bombardier Recreational Products (BRP) from stable to positive. In January 2011, BRP was raised from B3 to B2 default ratings. The ratings agency said it has now raised BRP’s corporate family (CFR) and probability of default ratings to B1 from B2, its senior secured revolving credit facility to Ba1 from Ba2, and its senior secured term loan to B1 from B2.
"The upgrade of BRP's ratings reflects the considerable improvement in the company's operating results driven by the successful introduction of new product categories, stabilization of its existing product volumes and benefits from its significant cost containment efforts", says lead analyst Darren Kirk in a statement.
Kirk says he expects BRP's operating trends to remain “modestly positive through the near term,” enabling further improvement to the company's credit metrics. He says BRP’s refinancing transaction will improve its liquidity position.
But the statement notes that BRP’s B1 CFR is “constrained” by 50 per cent ownership of Bain Capital. “Moody's believes Bain may eventually seek cash payouts or cause BRP's capital structure to alter materially from its current configuration,” writes Kirk. He adds that Moody’s does not expect to further upgrade BRP's ratings as long as it is controlled by a financial sponsor.
BRP, which manufactures Sea-Doo personal watercraft, sportboats and Evinrude outboards, had sales for the year ended October 31, 2011 of C$2.5bn.
