Moody's rates EMI notes Ba1

Moody's Investors Service assigned a provisional Ba1 rating to EMI Group plc's proposed €300 million of senior unsecured notes due 2013. The outlook is stable.

Moody's said the rating recognizes EMI's position as a global player in the oligopolistic recorded music industry as well as the company's leading world-wide position in music publishing with a more stable revenue base compared to recorded music.

The rating further acknowledges the significant restructuring steps EMI has taken to lower the company's cost base as well as management's commitment to contain debt.

However, the rating also reflects the continuing deterioration in the world recorded music markets, partly due to heavy loss of legitimate revenue to piracy, the limited visibility to date on the success of (recently stepped-up) anti-piracy measures taken by the company (and the recorded music industry as a whole), uncertainties about the company's ability to produce free cash flow (after capex and dividends) at current dividend levels and the challenges of building revenues and profits from legitimate distribution of EMI's music content over the internet, Moody's added.

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