Moody's may downgrade RCN

Moody's Investors Service said it placed RCN Corp.'s B1 probability-of-default rating under review for possible downgrade, where the company's B1 corporate family rating and Ba2 senior secured bank credit facility were placed on March 16 following the company's announcement of a potential $350 million to $400 million debt-financed dividend to shareholders.

During the review process, the agency will evaluate the added risks associated with a meaningful increase in leverage while the company pursues a capital-intensive expansion strategy in several of its markets.

In Moody's view, the company's B1 corporate family and probability-of-default ratings have some room for incremental debt, but should the company decide to go ahead with the dividend, it is very likely that its Ba2 bank debt rating will be lowered regardless of whether the corporate family rating is also lowered given the material increase in first-lien debt and the agency's corresponding expectation of higher loss severity.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.