Moody's rates Valor loan

Moody's Investors Service said it assigned a B2 rating to Valor Telecommunications LLC's proposed $890 million senior secured bank credit facility.

The new facility is part of a proposed recapitalization, which will include the issuance of Income Deposit Securities, a combined senior subordinated debt and common stock offering. The IDS will be issued at Valor Communications Group Inc., a newly formed holding company.

Moody's also assigned a B2 senior implied rating to Valor. At the conclusion of Valor's IDS transaction, Moody's will withdraw the existing Ba3 senior secured rating for Valor Telecommunications Enterprises LLC and B1 senior implied rating for Valor Telecommunications Southwest LLC.

The outlook is negative.

Moody's said that Valor's relatively strong operations should provide a reasonable basis for meeting its interest obligations and likely dividend payments. The favorable regulatory environment in which Valor operates and its low inherent business risk support the ratings on the proposed transaction. High leverage, however, which is not reduced in the recapitalization, constrains the ratings.

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