Moody's Investors Service has withdrawn its preliminary ratings on Domino's Pizza whole business securitization called Domino’s Pizza Master Issuer LLC Series 2011-1.
Yesterday the franchisor of quick service restaurants postponed its announced early refinancing of existing ABS debt citing market volatility. The company did this after it announced price guidance on its $1.5 billion whole business secrutization.
Moody's cited "its own business reason" for withdrawing its provisional ratings. It announced, as it referred readers to its withdrawal policy on its Web site, that the "issuer has informed us that the issuance of the notes is not presently scheduled to close."
The rating agency had assigned provisional ratings to the whole business deal of 'Baa1 (sf)' on the Class A-1 senior secured revolving notes and 'Baa1 (sf)' on the Class A-2 senior secured notes.
The Class A-1 notes are worth $100 million while the Class A-2 notes are worth $1.525 billion. The offering was rated by both Moody's and Standard & Poor's.
The sole structuring advisor and joint bookrunning manager is Barclays Capital.
According to a Moody's presale report, sources of payment for the Class A notes will primarily be from franchise royalties and fees from all domestic and international franchised and company-owned restaurants. They will also be from profits on Domino’s U.S. and Canadian supply-chain business.
In April 2007, some Domino's units entered into a $1.85 billion securitized financing facility comprising $1.7 billion of fixed-rate notes and $150 million of variable funding notes. As of June 19, the outstanding securitized debt balance was $1.45 billion. For ASR's full report on the deal please click here.
The company said that its existing securitized debt requires interest-only payments until April 2012 that can be extended on an interest-only basis until April 2014 via two one-year extensions.
Domino's said that "it expects to maintain the flexibility to take advantage of these interest-only periods. The existing securitized debt includes a prepayment penalty if refinanced prior to January 2012. In the meantime, Domino's will continue to monitor the financial markets."
According to Bloomberg, other deals that were pulled given broader market volatility are the CRE CDO from Prima Capital worth $670 million. The transaction was pulled last month, Bloomberg reported, a day prior to expected pricing. The withdrawal was due to CMBS spread widening caused by market volatility.
It was also, like at least two other CMBS deals, pulled from the market because Standard & Poor's reviewed its CMBS rating model.