Moody's rates Zayo Group notes B2

Moody's Investors Service said it assigned a B2 (LGD 3, 49%) rating to the $100 million upsize of Zayo Group, LLC's existing $250 million senior secured notes. The agency also said it affirmed its B2 corporate family rating and B2 probability of default rating.

The outlook is stable.

The proceeds will be used to fund a portion of the acquisition of American Fiber Systems. The balance of the acquisition will be funded through cash on hand and about $40 million in new equity contributions.

The company also has a $75 million senior secured revolving credit facility, which the agency said it does not rate. The company will also seek to upsize the revolver by $25 million to give it additional liquidity capacity.

The ratings reflect the company's deep fiber network in its markets that have helped drive strong revenue growth in a difficult operating and liquidity-strapped environment for traditional competitive telecommunications carriers, Moody's said.

The ratings are tempered by high customer concentration and small scale in a highly competitive environment, the agency said.

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