Moody's Upgrades McGraw-Hill Credit Rating to B1 on Post-IPO Debt Reduction

Moody's Ratings has upgraded McGraw-Hill Education, Inc.'s corporate family rating to B1 from B2 and revised its outlook to stable from positive. The ratings action reflects the educational publisher's significant debt reduction following its initial public offering and expectations for steady revenue growth.

Key Drivers for the Upgrade

The upgrade was primarily driven by the company's repayment of $646 million in debt since its July 2025 IPO, according to the Moody's report. This deleveraging improved McGraw-Hill's leverage to 4.3x as of March 2026, down from 5.1x pre-IPO.

Moody's expects McGraw-Hill's revenue and cash flow to grow in the low to mid-single-digit percentage range over the next two years. This growth is anticipated to be fueled by an increase in the K-12 textbook adoption schedule, particularly for core curricula in the three largest adoption states: California, Florida, and Texas. The company is expected to continue its debt repayment strategy, consistent with its target net leverage ratio of 2.0x to 2.5x.

Balancing Factors and Market Risks

Despite the improved rating, Moody's noted that the B1 rating still reflects several challenges. These include McGraw-Hill's moderately high financial leverage, the seasonality of its cash flow, and intense industry competition.

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The ratings agency highlighted the revenue volatility in the company's large K-12 business, which is tied to state purchasing cycles. In its higher education segment, growth is tempered by price compression, competition from open educational resources, and cyclical university enrollment trends. The company also remains majority-owned by private equity sponsor Platinum Equity, which holds 87% of the voting control.

Liquidity and Specific Rating Changes

Moody's assessed McGraw-Hill's liquidity as "very good" for the next 12 to 18 months. The company's financial position is supported by:

• A cash balance of $254 million as of March 2026.
• Expected free cash flow of more than $200 million in fiscal 2027.
• Access to an undrawn $300 million revolving credit facility due in 2029.

Alongside the corporate family rating, Moody's also upgraded the company’s senior secured notes and bank credit facility to Ba3 from B1, and its senior unsecured notes to B3 from Caa1.