Moody's cuts eir secured rating

Moody’s Investors Service said it lowered the backed senior secured rating at eircom Finance DAC and the backed senior secured bank credit facility at eircom Finco Sarl to B2 from B1. The agency, however, affirmed eircom Holdings (Ireland) Ltd.’s B1 corporate family rating and B1-PD probability of default rating.

The company is creating a new joint venture, Fibre Network Ireland, with InfraVia Capital. Eir sold a 49% stake to InfraVia.

"The sale of a minority stake in FibreCo will weaken eir's business model and increase the group's complexity, at a time when leverage remains high for the rating. However, the affirmation of the B1 CFR reflects the company's growing margins and sustained positive free cash flow generation," said Ernesto Bisagno, a Moody's vice president, senior credit officer and lead analyst for eir, in a press release.

Proceeds from the sale include cash from the equity sale, and cash from a new €765 million debt facility at FibreCo level.

"The downgrade of the backed senior secured debt instrument ratings to B2 from B1 reflects that following the placement of new debt at FibreCo level, an operating company closer to the best quality assets within the group, the debtholders at holding company level will become structurally subordinated," added Bisagno.

The outlook remains stable.

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