Moody’s adds LD to Rackspace rating

Moody’s Investors Service said it appended a limited default, or LD, designation to Rackspace Technology Global, Inc.’s probability of default rating, changing it to Caa1-PD/LD. Moody's will remove the /LD designation after three business days.

In its Aug. 8 earning call, Rackspace reported it retired $222 million of its 5 3/8% unsecured notes due 2028 during the first seven months of 2023 through open-market purchases for about $77 million.

“Moody's views Rackspace's bond buy-back as a distressed exchange given the debt was bought at a substantial discount to par and Moody's views the capital structure as potentially untenable. A distressed exchange is considered a default under the rating agency's definition,” the agency said in a press release.

The outlook remains negative.

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