Moody's rates Avianca, notes B3

Moody's Investors Service said it assigned B3 ratings to Avianca Group International Ltd. and its post-bankruptcy exit financing. Avianca's planned $1.6 billion exit financing is expected to be comprised of a $1.05 billion tranche of senior secured notes and a $550 million tranche of senior secured notes, both maturing in seven years.

“The ratings have been assigned in anticipation of the emergence but consider the company's post-bankruptcy exit consolidated credit profile, including good liquidity, improved cost structure and an efficient fleet and network. Upon emergence, Avianca, the issuer of the exit financing, will be created and registered in the U.K., succeeding current holding company Avianca Holdings SA,” Moody’s said in a press release.

The proceeds will be used to refinance Avianca's senior secured super-priority debtor-in-possession term loan A. The $946 million DIP senior secured super priority term loan B will be converted to equity and the company will raise $200 million in equity.

The outlook is stable.

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