Moody's rates WMG notes Caa2, outlook cut

Moody's Investors Service said it assigned Caa2 ratings for WMG Holdings Corp.'s $700 million of senior unsecured notes, affirmed Warner Music Group's existing ratings and changed the outlook to negative from stable.

Moody's affirmed Warner's B1 rated $250 million senior secured revolving credit facility and $1.2 billion senior secured term loan and B3 rated $650 million senior subordinated notes due 2014.

These actions follow the announcement of the new financing and application of the net proceeds to fund another dividend to the company's equity sponsor group (Music Capital, Thomas H. Lee, Bain Capital and Providence Equity).

While the distribution effectively removes substantially all of the equity originally committed by the sponsors, Moody's said Warner Music has considerably outperformed prior projections provided by management.

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