Moody's cuts LodgeNet loan to B1

Moody's Investors Service said it downgraded LodgeNet Entertainment Corp.'s probability-of-default rating to B2 from B1 and its senior secured credit facility to B1 (LGD3, 33%) from Ba3 (LGD3, 32%). The B1 corporate family rating was affirmed.

The outlook is stable.

The downgrade follows the company's repayment of substantially all of its $200 million 9½% senior subordinated bonds with the proceeds from a $225 million delayed-draw senior secured term loan. The transaction eliminated the junior debt in the company's capital structure and lowered the company's debt service costs.

The agency said the lower credit facility rating reflects its expectation of higher loss severity under the senior secured debt now that it is the only debt in the capital structure.

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