Moody's upgrades Terremark

Moody's Investors Service said it upgraded Terremark Worldwide, Inc.'s corporate family and probability-of-default ratings to B2 from B3, upgraded its $470 million 12% senior secured notes due 2017 to B1 (LGD3, 42%) from B2 (LGD3, 42%) and affirmed the SGL-2 speculative-grade liquidity rating.

The outlook is stable.

The agency said the upgrade is due to the reduced project and execution risk following the company's near completion of new space at its Virginia and Silicon Valley data centers.

Moody's noted that the company is seeking to raise an additional $50 million under the 2017 notes indenture, which would bring the face amount of the notes to $470 million. The company will use the add-on proceeds largely for general corporate purposes, which will include the acceleration of the build-out of its data centers.

Nevertheless, Terremark's B2 corporate family rating reflects the significant continuing execution risk from the company's ongoing expansion, increasingly competitive environment as the company grows its managed service business, high leverage and the high capital intensity inherent in the company's business plans, the agency said.

The debt-to-EBITDA ratio was about 7.2 times at Dec. 31.

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