Moody's changes eircom to positive, rates loan B3

Moody's Investors Service said it changed the outlook for eircom Holdings (Ireland) Ltd. and its rated subsidiaries to positive from stable, assigned a B3 rating to the term loan B3 borrowed by eircom Finco Sarl, a new tranche of the existing term loan facility, and affirmed eircom’s B3 corporate family rating, its B3-PD probability of default rating, the B3 rating on the €2 billion senior secured credit facility raised by eircom Finco and the B3 rating on the €350 million senior secured notes due 2020 issued by eircom Finance Ltd.

The change in outlook primarily reflects the agency’s view that the company's operating performance will improve over the next 12 to 18 months, mainly driven by price increases, while it will start generating positive free cash flows that will allow it to slowly reduce debt. As a result, eircom's metrics are reaching levels that could soon support upward pressure on the rating, Moody’s said.

The change in outlook also reflects the benefits for eircom of the recent amend-and-extend process, such as the extension of its debt maturity profile by almost three years and the increased operational flexibility (more headroom under covenants, lower administrative burden) at no incremental financial cost, the agency said.

Finally, Moody’s said the change in outlook also reflects eircom's increasing enterprise value, consistent with rising valuations in the European telecom sector.

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