Moody's cuts VeriSign notes to junk

Moody's Investors Service said it downgraded the ratings for VeriSign, Inc.'s new and existing senior notes to Ba1 (LGD3) from Baa3 (LGD2) and affirmed its Ba2 corporate family rating, Ba2-PD probability of default rating and SGL-1 speculative grade liquidity rating. The outlook is stable.

The agency said the downgrade of VeriSign's notes was prompted by the company's plans to upsize its proposed senior notes offering to $500 million from $400 million. The upsizing will result in a higher proportion of senior unsecured debt relative to subordinated convertible debentures in the capital structure, and the downgrade reflects lower expected recovery for senior unsecured notes in the new capital structure, Moody’s said.

The Ba2 corporate family rating reflects VeriSign's strong market position as the exclusive global registry operator for domain names in the.com top level domain, the agency said.

Moody’s said the Ba2 rating also considers VeriSign's moderately high projected leverage and its history of significant returns of capital to shareholders.

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