Moody's rate Abitibi notes Ba2

Moody's Investors Service said it assigned a Ba2 rating to Abitibi-Consolidated Inc.'s new $200 million floating-rate notes due June 15, 2011 and $200 million of 7.75% notes also due on the same date.

At the same time, Abitibi's existing senior unsecured, senior implied and issuer ratings were affirmed at Ba2.

Proceeds from the new debt issue will be used to repay the $118 million of debt at Abitibi's Alabama River Newsprint operation, for general corporate purposes (which is likely to include the repayment of other existing debt), and in the interim, to bolster liquidity.

Moody's said the new and existing ratings reflect the company's continued high financial leverage and weak financial performance. With there being a greater probability that Abitibi's through-the-cycle financial credit protection metrics will be at levels below - rather than above - those commensurate with its Ba2 rating, Abitibi's rating outlook remains negative.

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