Moody's rates Windstream note Ba3, lifts some debt from junk

Moody's Investors Service said it assigned a Ba3 (LGD5, 75%) rating to Windstream Corp.'s proposed $500 million senior notes due 2019.

The agency also upgraded the company's $500 million senior secured revolving credit facility, $500 million senior secured term loan A and $1.9 billion senior secured term loan B, Valor Telecommunications Enterprises, LLC's $400 million senior notes due 2015 and Windstream Holdings of the Midwest, Inc.'s $100 million senior notes due 2028 to Baa3 (LGD2, 19%) from Ba1 (LGD2, 24%).

Windstream's Ba2 corporate family rating, Ba3 (LGD5, 75%) $800 million senior notes due 2013 and $1.703 billion senior notes due 2016 and SGL-1 speculative grade liquidity rating were affirmed.

The outlook is stable.

The proceeds of the new notes will be used to refinance an equal amount of Windstream's senior secured term loan.

The agency said the Ba2 corporate family rating reflects Windstream's high debt levels and the expected downward pressure on wireline revenue and cash flow growth in the future. Due to the company's high dividend payments, cash flows available for debt reduction are likely to remain below 3% of total debt in the next two years and Moody's does not expect debt to decline below 3.3x EBITDA over the ratings horizon.

The ratings benefit from the stability of the company's operations and management's track record of delivering on expected results, the agency said.

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