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Investing.com -- Moody’s Ratings has affirmed Anywhere Real Estate Group LLC’s corporate family rating at B3 while making several adjustments to the company’s debt ratings, according to a statement released Wednesday.
The rating agency maintained Anywhere’s probability of default rating at B3-PD and senior secured first lien bank credit facility rating at Ba3. At the same time, Moody’s downgraded the company’s backed senior secured second lien notes to B3 from B2 and the senior unsecured notes to Caa2 from Caa1.
Moody’s assigned a B3 rating to Anywhere’s proposed new backed senior secured second lien notes due 2030 and upgraded the speculative grade liquidity score to SGL-3 from SGL-4. The outlook remains stable.
The new second lien notes will refinance Anywhere’s $403 million exchangeable notes due July 2027, repay revolver borrowings, and cover transaction fees. After the refinancing, the company will have $520 million outstanding on its $1.1 billion revolver due July 2027.
The downgrade of the second lien and senior unsecured ratings reflects the removal of first-loss absorption previously provided by the exchangeable notes and an increase in senior secured second lien debt.
Moody’s affirmed the B3 corporate family rating despite noting that the refinancing will negatively impact financial leverage and cash flow due to increased fixed debt and borrowing costs. The rating agency expects Anywhere to generate approximately negative $100 million of free cash flow in 2025, including around $114 million of one-time legal costs.
The liquidity score upgrade to SGL-3 comes as the refinancing extends Anywhere’s debt maturity profile with no major debt maturities until July 2027. Moody’s believes the remaining revolver capacity is sufficient to cover cash flow deficits and seasonal working capital needs over the next 12-18 months.
Anywhere’s high debt to EBITDA leverage stood at 8.6x for the 12 months ended March 31, 2025. Moody’s expects this ratio to improve to 7.5x over the next 12-18 months as financial performance gradually recovers through low single-digit revenue growth supported by modest home price appreciation, stable commission rates, and flat transaction volumes.
The company’s financial performance is strongly linked to home sale prices, transaction volumes, and commission rates. Transaction (JO:NTUJ) numbers have remained muted following a decline in the high teens percentage rates during 2023, though the pace of decline has slowed since early 2024.
Moody’s notes that Anywhere’s strong competitive position and investments in brands and technology enhance its ability to attract and retain sales professionals during market downturns, positioning it well for when recovery occurs.
The stable outlook reflects Moody’s expectation that Anywhere’s revenue and profit rates will improve as the existing home sale market gradually recovers and cost reductions take effect, driving debt to EBITDA toward 7.5x and EBITA to interest expense above 1.0x.
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