Fitch downgrades Digicel, rates notes CCC+, loan B

Fitch Ratings said it assigned a CCC+ rating with a loss-given-default assessment of RR5 to Digicel Group Ltd.'s proposed $1.4 billion offering of senior subordinated notes due 2015 and a B rating with a recovery rating of RR3 to Digicel International Finance Ltd.'s $850 million senior secured credit facility.

The agency also downgraded Digicel Ltd.' foreign-currency issuer default rating to B- from B and its $450 million senior notes due 2012 to B-/RR4 from B/RR4.

The outlook is stable.

Proceeds from the proposed note issuance are expected to be used primarily to purchase 100% of Digicel Ltd.'s common equity.

The agency said the Digicel's ratings reflect the company's high leverage, limited liquidity and rapidly increasing debt level, which are due to acquisitions necessary funding for the rapid build-out of new markets Haiti and Trinidad and Tobago. The total debt-to-EBITDA ratio is expected to be about 4x at March 31.

The ratings also incorporate Digicel's position as the leading provider of wireless services in the Caribbean, strong brand recognition, growing portfolio of wireless assets and Fitch's expectation that Digicel will rapidly delever due to strong EBITDA growth.

The downgrade of Digicel Ltd.'s ratings reflects the increased burden the proposed transaction places on the operating assets and loss of financial flexibility, the agency said.

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