Moody's downgrades Versatel

Moody's Investors Service said it downgraded the corporate family rating of Versatel AG to B2 from B1 and the company's €525 million senior secured floating-rate notes due 2014 to B3 from B2.

The outlook is stable.

The downgrade reflects the impact of continuing pressure from the competitive environment, which has led to deterioration in Versatel's revenue and profitability, as well as deterioration in its debt protection metrics beyond initial expectations, Moody's said.

In light of the company's second-quarter results, which confirmed certain negative operating trends notably in the residential segment, Moody's said it believes it is now more likely that Versatel's debt-to-EBITDA ratio for 2009 will exceed the 3.5 times upper limit at the B1 rating level.

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