Moody's cuts ERC Ireland

Moody's Investors Service said it downgraded to B2 from B1 the corporate family rating and probability of default rating of ERC Ireland Finance Ltd., an indirect parent company of eircom Group Ltd.

Moody's also said it downgraded to Caa1 from B3 the rating of ERC Ireland's €350 million senior unsecured notes due 2016 and the rating of the €350 million second-lien term loan of ERC Ireland Holdings Ltd. The rating of ERC Ireland Holdings' €3.3 billion senior secured facility was downgraded to B1 from Ba3. The downgrades conclude a review that began in April 2009.

The outlook is negative.

The downgrade reflects concerns about the combination of a lack of meaningful deleveraging as a result of a weakening operating performance and uncertainties regarding the overall strategic direction of the company and its long-term capital structure, Moody's said.

The company's weak operating performance trends highlight the impact of the adverse macroeconomic environment in Ireland, the agency said, as well as increasing competitive and regulatory pressures.

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