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Moody's lifts RCN to SGL-2
Moody's Investors Service said it upgraded RCN Corp.'s speculative-grade liquidity rating to SGL-2 from SGL-3 and affirmed its B1 corporate family rating, B2 probability-of-default rating and B1 (LGD3, 33%) senior secured credit facility.
The outlook is stable.
The agency said the upgrade of the SGL rating reflects the perceived improvement in RCN's liquidity profile and financial flexibility based on maintenance of excess cash balances combined with stability and potential improvement of the recent transition to positive free cash flow as capital spending relative to revenue generation moderates and this specific corporate objective is managed to realize free cash flow growth.
The B1 corporate family rating continues to reflect the significant competitive threats from larger incumbent cable providers and regional bell operating companies and management's shareholder-oriented fiscal policies, Moody's said.
In the agency's view, these risks are partially offset by RCN's moderate debt-to-EBITDA leverage, strong operating capabilities including improved EBITDA margins and the company's deemed high-quality network infrastructure.
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