Moody's rates Donnelley notes B3

Moody's Investors Service said it assigned a B3 rating (LGD5, 86%) to R.H. Donnelley Corp.'s new $1 billion senior unsecured notes and affirmed its B1 corporate family and probability-of-default ratings.

Moody's changed the loss-given-default assessments on the issuer's 6 7/8% senior notes due 2013 and 8 7/8% senior notes due 2016 rated B3 to LGD5, 86% from LGD6, 90%. Moody's also changed the assessments on R.H. Donnelley Inc. Dex, Media East LLC and Dex Media East LLC's senior secured revolving credit facilities and term loans rated Ba1 to LGD2, 13% from LGD2, 17%.

The outlook is stable.

Proceeds will be used to retire Donnelley's $600 million senior subordinated notes and $328 million senior unsecured credit facility.

According to Moody's, the ratings reflect the company's possible acquisition strategy, limited growth prospects, growing competition, recent sales declines and its high leverage. The company had a debt-to-EBITDA ratio of about 7 times at closing.

The ratings are supported by Donnelley's scale, strong market position, good liquidity profile, diversified market base and strong cash flow generation, the agency said.

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