Moody's rates Leap Wireless notes B3

Moody's Investors Service said it assigned a B3 rating to Leap Wireless International Inc.'s proposed $400 million of senior notes. The debt will be issued by Leap's wholly owned subsidiary Cricket Communications, Inc.

Moody's also affirmed Leap's negative outlook, reflecting the company's inconsistent operating performance and weak credit profile relative to its B2 corporate family rating. Moody's affirmed the senior unsecured convertible noted due 2014 at Caa1 (LGD6, 95%), senior secured notes due 2016 at Ba2 (LGD2, 15%), senior unsecured notes due 2015 at B3 (LGD4, 67%) and senior unsecured notes due 2020 at B3 (LGD4, 67%).

The affirmation follows Cricket's announcement that it will increase the debt outstanding by round $400 million, the agency said. The company is positioning itself to have the financial flexibility to increase capital spending and potentially purchase additional spectrum assets over the next 12 to18 months.

The ratings on Leap reflect the company's small scale and the intensely competitive status of the wireless communications industry as well as the company's high leverage and negative free cash flow profile, the agency added.

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