Moody’s cuts Intelsat, rates Intelsat Jackson notes B1

Moody's Investors Service said it assigned a B1 rating to Intelsat Jackson Holdings SA's $1.25 billion senior secured notes and, as part of the same rating action, downgraded Intelsat SA's (Intelsat) probability of default rating to Caa3-PD from Caa2-PD.

Intelsat's Caa2 corporate family rating was affirmed as were the ratings for all outstanding debt instruments in the corporate family. Intelsat's speculative liquidity was affirmed at SGL-3, indicating adequate liquidity, and its rating outlook was maintained at negative.

Intelsat is the senior-most entity in the Intelsat group of companies and is the entity at which Moody's maintains corporate family and probability of default ratings, and is the only company in the family issuing financial statements. Intelsat guarantees debts at its subsidiary, Intelsat (Luxembourg) SA and, as well, at Intelsat (Luxembourg)'s subsidiary, Intelsat Jackson Holdings SA

Moody’s said the probability of default rating downgrade stems from the proceeds from the offering being used "for general corporate purposes, which may include working capital purposes and to repay, repurchase, facilitate an exchange and/or restructure existing debt of [Jackson] and/or Intelsat Luxembourg," which the agency interprets as a step towards a more comprehensive debt restructuring that the agency presumes will include interim steps in which outstanding debts are refinanced at less than par, and which it will likely interpret as comprising limited defaults.

Otherwise, because Moody's interprets the proceeds as being used for refinance purposes, and will have little if any impact on what it considers to be an unsustainable capital structure, Intelsat's corporate family rating and all pre-existing instrument ratings were affirmed and the outlook was maintained.

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