Moody's rates Digicel notes B1

Moody's Investors Service said it assigned a B1 (LGD3) rating to Digicel Ltd.'s proposed offering of $925 million senior notes due 2023. The outlook is stable.

The proceeds will be used to redeem 100% of the existing Digicel 8¼% senior notes due 2017. The remaining proceeds will be used to add cash to the balance sheet to be used for general corporate purposes.

The agency said Digicel Group Ltd.'s B2 corporate family rating is supported by its leading position as the largest wireless telecommunications carrier in the Caribbean and its successful track record at gaining significant market share and producing solid operating results relatively quickly after new markets are launched.

Digicel's history of debt-funded acquisitions and sizable dividend payments weigh down the rating, Moody’s said, and while the company has strong geographic diversification, this is mitigated by its exposure to Jamaica, which is struggling to revive its economy and experiencing competitive telecom pricing following the implementation of a new regulatory and tax scheme designed to increase government receipts.

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