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Moody’s Investors Service has upgraded the corporate family rating (CFR) of Oravel Stays Limited, the parent company of travel-tech platform OYO, from B3 to B2. The rating for its wholly-owned subsidiary, OYO Singapore’s senior secured term loan, has also been upgraded to B2, with a stable outlook maintained.
In a statement issued on Wednesday, Moody’s announced a B2 rating for the proposed $825 million senior secured term loan facility for OYO Singapore, fully underwritten by Deutsche Bank.
Moody’s explained that the new five-year term loan, along with $174 million in equity capital raised between June and August 2024, will be used to refinance the company’s existing term loan, which matures in June 2026, thereby easing refinancing pressures. Additionally, a portion of the proceeds will fund OYO’s proposed $525 million acquisition of U.S.-based Motel 6, expanding its footprint in the hospitality sector.
The company’s interest expenses are projected to decrease significantly, falling to $65–$70 million in FY24-25, compared to $101 million in the previous fiscal year, following partial repayment of its existing term loan.
According to Moody’s, ongoing earnings growth coupled with reduced interest obligations will enable OYO to achieve positive free cash flow for the full fiscal year in FY25-26, marking a pivotal shift after years of substantial cash burn.
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