Moody's rates Virgin Mobile loans B3

Moody's Investors Service said it assigned a B3 rating to the proposed senior secured credit facilities of Virgin Mobile USA LLC. Moody's also assigned a B3 senior implied rating for the company, and the outlook for all these ratings is positive.

The facilities include a $100 million senior secured revolving credit facility expiring 2010 and a $500 million senior secured term loan maturing 2012.

Moody's said the B3 senior implied rating reflects the challenging operating environment the company faces as U.S. wireless growth slows and carriers seek to increase their penetration of Virgin Mobile USA's target markets, the inherent challenges of profitably providing prepaid wireless service in the United States, as well as the company's high leverage and current lack of free cash flow.

Positively, Moody's said, the rating reflects the strength of the company's relationships and material contracts with its sponsors, Sprint Corp. (Baa3 developing) and the Virgin Group (unrated), the good market opportunity for the company's unique brand of wireless service, its recent success in the marketplace and prospects for continued strong subscriber growth.

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