Moody's rates LBI notes Caa1, cuts notes

Moody's Investors Service said it repositioned LBI Media Inc.'s probability of default rating to Caa2/LD from Caa2 to record the limited default following the company's exchange of roughly 76% of its 8½% senior subordinated notes due 2017 for new notes plus warrants at a 40% discount to par and the exchange of roughly 74% LBI Media Holdings, Inc.'s 11% senior discount notes due 2013 for new notes at a 60% discount to par.

Moody's also assigned a Caa3 (LGD5-75%) rating to the new 11½%/13½% payment-in-kind toggle second priority subordinated notes, downgraded the 9 ¼% senior secured notes due 2019 to Caa1 from B3 and downgraded the 8½% senior subordinated notes due 2017 to Ca from Caa3.

The company's Caa2 corporate family rating was affirmed and the outlook remains negative.

Moody's said the downgrade of the 9¼% senior secured notes reflects the reduced cushion provided by subordinated debt and the downgrade of the 8½% senior subordinated notes reflects their structural subordination to the new second priority secured notes.

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