Moody’s: Windstream loan B1

Moody’s Investors Service said it assigned a B1 (LGD 3) rating to Windstream Services, LLC’s new senior secured term loan.

The company plans to raise an incremental $400 million of secured debt to fund the repayment of near-term maturities, Moody’s said.

Along with the term loan offering, Windstream said it launched a tender offer to redeem up to $350 million of its 7 7/8% unsecured notes due November 2017.

The agency also said it affirmed Windstream’s B1 corporate family rating, SGL-2 speculative grade liquidity rating and maintained its stable outlook based on the improvement in Windstream’s liquidity profile.

Moody’s also downgraded the ratings on Windstream’s existing secured debt to B1 from Ba3 as a result of the proposed increase in secured debt.

The agency said it believes the collateral for the secured debt is deficient relative to the total secured indebtedness and an increase in secured debt will result in a corresponding increase in expected loss.

The ratings on Windstream’s unsecured debt remain at B2 (LGD 4), one notch below the corporate family rating due to its junior position in the capital structure, Moody’s said.

The ratings reflect the company’s scale and predictable base of recurring revenues, which is offset by its high leverage, declining top line and margin pressure, the agency said.

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