Ceridian's term loan, due in May 2017, will pay interest at 5.75 percentage points more than the London interbank offered rate, according to a person with knowledge of the transaction who declined to be identified because the terms are private.

The business services provider owned by Thomas H. Lee Partners LP is proposing to sell the loan at 98 cents on the dollar, the person said, reducing proceeds for the Minneapolis- based company and boosting the yield to investors.

Ceridian Loan

In emerging markets, relative yields fell for a second day, declining 2.6 basis points to 321.1 basis points, or 3.21 percentage points, according to JPMorgan Chase & Co.'s EMBI Global index. The measure has averaged 374 basis points this year.

The record low on Moody's liquidity-stress index follows a decline in the number of companies with liquidity ratings of SGL-4, the lowest speculative-grade level, to the fewest since November 2005, Moody's analysts Tom Marshella, Keith Foley, John Puchalla and Adam McLaren wrote in the report.

While two companies, Patriot Coal Corp. and Cinram International Inc. had their ratings withdrawn after filing for bankruptcy, Casella Waste Systems Inc. and GeoEye Inc. had their liquidity grades raised to SGL-3.

Free cash-flow at Rutland, Vermont-based Casella rose to $3.6 million in the fiscal quarter ended April 30, compared with negative cash flow of $23.4 million a year earlier. Free cash flow at GeoEye, the company being purchased by DigitalGlobe Inc., narrowed to negative $16.4 million in the first quarter of 2012 from negative $53.3 million a year earlier, Bloomberg data show.

Cash Flow

"Over the past couple of years, since the worst part of the downturn, cash flow has generally been improving," Puchalla said in a telephone interview. "Our forecast for the default rate is that it will remain relatively low by historical standards over the next year, and it gives investors some comfort, at least in the near term, investing in higher yielding bonds."

The index is calculated by dividing the number of companies rated SGL-4 by the total number in the index. When the number of companies assigned the lowest speculative-grade liquidity ranking falls, the measure also declines. The gauge, which falls as corporations' ability to manage cash needs improves, has plunged from a high of 20.9 percent in March 2009.

Default Rate