Moody's rates RCN loan B1

Moody's Investors Service said it assigned a B1 rating to RCN Corp.'s proposed $200 million senior secured term loan.

Moody's affirmed the B1 corporate family and probability-of-default ratings, and the B1 rating (LGD3, 33%) on RCN's $75 million revolving credit facility due 2013, $520 million senior secured term loan B due 2014 and $200 million new senior secured term loan.

The outlook remains stable.

Proceeds will be used to fund the acquisition of Neon Communications.

The B1 corporate family rating reflects high leverage following the company's special dividend to shareholders in June and the proposed debt-financed acquisition of Neon, Moody's said, as well as its relatively lower margins.

Supporting the ratings are the company's high penetration of multiple services, good growth trajectory and valuable network, the agency said.

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