Town Sports International (TSI), New York, announced credit rating upgrades by financial services companies Standard & Poor’s and Moody’s.

On Monday, Moody’s upgraded TSI’s corporate family rating to B1 from B2 and the probability of default rating to B2 from B3. Moody’s also upgraded the senior secured credit facility rating of Town Sports International LLC—the wholly owned subsidiary of Town Sports International Holdings Inc.—to Ba3 from B1. The speculative grade liquidity rating was upgraded to SGL-1 from SGL-2, and the ratings outlook is stable, according to a press release.

On March 22, Standard & Poor’s raised its corporate credit rating on TSI to B+ from B with a stable outlook. Standard & Poor’s also raised the issue-level rating on TSI’s $350 million credit facility, consisting of a $50 million revolver due 2016 and a $300 million term loan due 2018, to B+ from B.

“We are pleased with the ratings upgrades we have recently received by both Standard and Poor’s and Moody’s,” TSI Chief Financial Officer Dan Gallagher said in a statement. “We have been generating EBITDA growth and increases in free cash flow, while consistently reducing our debt and improving our credit and leverage metrics. Many improvements were made in the business in 2011, and we remain excited about our future prospects.”

Rick Caro, president of Management Vision, New York, says the rating upgrades are a positive for TSI.

“Wall Street firms, mutual funds, hedge funds and other financial institutions make part of their decisions on investments in debt instruments on ratings levels,” Caro says. “In some cases, they will not invest in debt below a certain grade. This notification of an upgrade by the credit rating services is good news indeed for Town Sports International.”

Earlier this year, TSI, which operates New York Sports Clubs, Philadelphia Sports Clubs, Boston Sports Clubs and Washington Sports Clubs, reported $115.8 million in fourth quarter 2011 revenue, a 1.5 percent increase from $114.1 million in fourth quarter 2010. For the year, TSI generated $466.9 million in revenue, a 1 percent increase from $462.4 million in 2010.

TSI also recently announced that Terry Kew will begin his duties as the new chief operating officer of the company this month.