Moody's rates Alltel loans Ba3, Caa1

Moody's Investors Service said it assigned B2 corporate family and probability-of-default ratings and an SGL-2 speculative-grade liquidity rating to Alltel Corp.

The agency also assigned Ba3 (LGD2, 27%) ratings to Alltel Communications Inc.'s $14 billion senior secured term loan B due 2015 and $1.5 billion senior secured revolving credit facility due 2013 and a Caa1 (LGD5, 79%) rating to its $7.7 billion senior unsecured committed bridge facility.

The oultook is stable.

Proceeds from the loans will be used to finance the acquisition of Alltel by TPG Capital and Goldman Sachs Capital Partners, along with $2.7 billion of existing senior unsecured notes and $4.6 billion (16%) of common equity contributed by the equity sponsors.

Alltel's A2 $2.7 billion senior unsecured notes remain under review for possible downgrade. Moody's expects to downgrade the notes to Caa1 following the acquisition.

The agency said Alltel's B2 corporate family rating is constrained by the considerable financial leverage pro forma for the buyout and an expectation that Alltel's credit metrics, including free cash flow to debt, will remain weak for at least 18 to 24 months. The total adjusted debt-to-EBITDA ratio is expected to approximate 8.0x at closing.

The rating is supported by the flexibility of the proposed capital structure, the relatively long-dated maturity of Alltel's debt obligations, a $1.5 billion senior secured revolving credit facility and the company's strong market position, the agency said.

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