Moody's rates Abitibi-Consolidated debt Ba3

Moody's Investors Service said it rated Abitibi-Consolidated Inc.'s new up to $500 million senior unsecured debt issue Ba3.

Concurrently, the company's Ba3 senior implied, senior unsecured and issuer ratings were affirmed, as was the SGL-4 speculative grade liquidity rating. The outlook remains negative.

While the new $500 million debt issue and refinance are neutral to Abitibi's debt leverage, Moody's has noted in recent communications that the company's credit protection metrics lagged its rating and that proactive steps were required so as to more appropriately balance cash flow to debt.

Moody's said the Ba3 ratings reflect Abitibi's very high financial leverage and the resulting very poor credit protection measures observed over the past three years.

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