Moody’s cuts FMG loans, notes; rates notes Ba1

Moody's Investors Service said it assigned a Ba1 rating to FMG Resources (August 2006) Pty Ltd.'s $2.3 billion senior secured notes issue.

At the same time, the agency downgraded FMG Resources’ senior unsecured ratings to B1 from Ba3 and affirmed the Ba1 rating on the existing senior secured debt facilities.

Moody's also affirmed Fortescue Metals Group Ltd.'s Ba2 corporate family rating.

All outlooks remain negative.

Net proceeds are expected to be used to redeem Fortesuce's $1 billion senior unsecured notes coming due in 2017 and $400 million senior unsecured notes coming due in 2018. Fortescue also plans to swap certain of the senior unsecured notes due in 2019 for the new senior secured notes, and the agency expects the remainder of the proceeds will be used to further repay existing debt.

Moody’s said the Ba1 rating on Fortescue's senior secured debt reflects its priority position in Fortescue's capital structure and benefits from the security package. At the same time, the downgrade of Fortescue's senior unsecured notes ratings to B1 from Ba3 reflects the additional $2.3 billion of secured debt, which the company has just issued.

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