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Investing.com -- Moody’s Ratings has downgraded Wayfair LLC’s senior secured notes ratings to B2 from B1 while affirming the company’s B3 corporate family rating (CFR), the ratings agency announced Tuesday.
The downgrade reflects a decrease in junior capital as Wayfair refinances its unsecured convertible notes with secured debt, resulting in a larger portion of the company’s capital structure becoming secured.
Moody’s also assigned a B2 rating to Wayfair LLC’s proposed $700 million backed senior secured notes due 2032. The outlook for both Wayfair Inc. and Wayfair LLC remains stable, and the company’s speculative grade liquidity rating remains unchanged at SGL-1.
The proceeds from the proposed senior secured notes will be used to fund balance sheet cash to prefund a portion of convertible notes due in 2027 and 2028, as well as for general corporate purposes.
Wayfair’s B3 CFR reflects its high debt level exceeding $3 billion relative to weak but improving operating margins. The company’s lease adjusted EBITDA was $419 million with debt/EBITDA at 9.7x for the last twelve months ending September 30, 2025.
Moody’s expects Wayfair to post revenue growth for Q4 FY 2025 with leverage improving to approximately 8.1x. If growth can be sustained and costs contained, the agency projects debt/EBITDA to improve to 6.5x by the end of 2026.
The company maintains a strong cash balance of $1.1 billion as of September 2025 and is forecast to generate positive free cash flow of approximately $310 million in 2025.
Wayfair operates at significant scale with $12.2 billion of revenue in the home products category, reaching over 21 million active customers and connecting more than 20,000 suppliers through its technology and logistics infrastructure.
According to Moody’s, ratings could be upgraded if Wayfair generates consistent revenue and operating earnings growth while maintaining good liquidity. Conversely, ratings could be downgraded if sales and profitability growth are insufficient to generate positive free cash flow and deleveraging.
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