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Moody's lowers R.H. Donnelley
Moody's Investors Service said it downgraded R.H. Donnelley Corp.'s corporate family rating to Caa2 and its probability-of-default rating to Ca, following the company's announcement that it will miss a scheduled coupon payment due Wednesday.
The agency lowered several series of the company's 6 7/8% notes to Ca (LGD4, 54%) from Caa3 (LGD5, 70%); Dex Media West LLC's 9 7/8% senior subordinated notes due 2013 to Caa2 (LGD2, 21%) from Caa1 (LGD3, 33%); Dex Media Inc.'s 8% senior unsecured global notes due 2013 to Caa3 (LGD3, 30%) from Caa2; and (LGD3, 44%) and 9% senior discount global notes due 2013 to Caa3 (LGD3, 30%) from Caa2 (LGD3, 44%).
R.H. Donnelley Inc.'s senior secured revolving credit facility due 2009/2011 is rated B1 (LGD1, 4%) and 11¾% senior unsecured notes due 2015 at B3 (LGD2, 14%); Dex Media East LLC's senior secured revolving credit facility and term loans at B1 (LGD1, 4%); and Dex Media West LLC's senior secured revolving credit facility and term loans at B1 (LGD1, 4%) and 8½% senior unsecured notes due 2010 and 5 7/8% senior unsecured notes due 2011 at B3 (LGD2, 14%).
The outlook is negative.
The downgrade of the probability-of-default rating to Ca reflects heightened concern that the company will soon opt for a prepackaged bankruptcy, distressed exchange or other restructuring, according to the agency.
The downgrade of the corporate family rating to Caa2 also incorporates the near-term pressure presented by tightening financial maintenance covenants of R.H. Donnelley Inc. and Dex Media West as well as a substantial funding gap posed by a sizable step-up R.H. Donnelley Inc.'s required term loan amortization payments, the agency said.
Ratings reflect R.H. Donnelley's persistently high leverage, its vulnerability to weakened market conditions facing the yellow pages publishing business and the increasing threat posed by competing directory providers, the agency noted.
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