Moody’s gives Ba3 to Latam notes

Moody's Investors Service said it assigned a Ba3 foreign currency rating to the proposed up to $500 million senior unsecured notes to be issued by Latam Airlines Group SA (Ba2 stable).

The outlook is stable.

Proceeds will be used for liability management and for other general corporate purposes.

Moody’s said the Ba3 rating is one notch lower than Latam Airlines' Ba2 corporate family rating in order to reflect the effective subordination of those unsecured creditors to the company's other existing secured debt.

Latam Airlines' consolidated debt is composed mainly of long-term secured bank obligations and capital leases collateralized by aircrafts, representing about 70% of its total debt as of fiscal year end 2014. As such, the proposed unsecured notes will rank below all the company's existing and future secured claims, the agency said.

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