Moody's cuts Consolidated

Moody's Investors Service said it downgraded the corporate family rating of Consolidated Communications, Inc. to B3 from B2 and its probability of default rating to B3-PD from B2-PD. The first-lien credit facility, consisting of a $250 million revolver and about $1 billion of outstanding term loans, was downgraded to B3 from B2. Moody's also downgraded the company's $1.15 billion of senior secured notes to B3 from B2. The company's speculative grade liquidity rating was downgraded to SGL-3 from SGL-2, reflecting adequate liquidity.

“The downgrade is the result of a reduction in Consolidated's EBITDA and margins following the transformative sale of its long-held wireless partnership assets, which provided steady annual cash dividends including about $43 million in 2021. Moody's included these cash dividends from the company's five limited wireless partnership interests in its calculation of EBITDA, which contributed to lower debt leverage (Moody's adjusted) in the past,” the agency said in a press release.

Moody's said it estimates Consolidated's debt leverage (Moody's adjusted) will now be around 7.2x at year-end 2023, before declining to a still-elevated level of about 6.3x at year-end 2024.

The outlook is stable.

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