Moody's assigns Intelsat loans Ba3, B3

Moody's Investors Service said it assigned ratings to Intelsat SA, consisting of a B3 corporate family rating, a B3-PD probability of default rating, Ba3 rating to the planned senior secured revolving credit facility and B3 ratings to the proposed senior secured term loan B and senior secured notes.

Intelsat's main operating company, Intelsat Jackson Holdings SA, is the borrower of the credit facilities and the issuer of the notes. The outlook is stable for both Intelsat and Jackson.

Intelsat is expected to emerge from its Chapter 11 process in the first quarter of this year with $6.375 billion of debt, which will constitute about 40% of its pre-emergence debt.

Intelsat's B3 CFR is constrained by an estimate that leverage (adjusted debt/EBITDA) will start around 7x after emerging from bankruptcy, until about $1 billion of C-band cost reimbursements are received in 2022 and used to repay debt, improving leverage towards 6x by the end of 2023, capital spending and other factors. On the plus side, Intelsat benefits from its leading market position, a good but declining backlog and good liquidity, Moody’s said.

Intelsat plans to raise a new $3.375 billion secured term loan B and $3 billion of secured notes. The proceeds will be used to repay the DIP amount outstanding, repay secured and unsecured claims, and to pay fees and expenses. The company will also put in a place a new $500 million secured revolving credit facility that is not expected to be drawn at close.

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